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This article first appeared in The Edge Financial Daily on February 15, 2019

CB Industrial Product Holdings Bhd
(Feb 14, RM1.08)
Maintain market perform with a target price of RM1.10:
CB Industrial Product (CBIP) has bagged four contracts to set up a crude palm oil (CPO) mill, palm kernel crushing and biogas plants. The contracts have an aggregate value of RM132 million, bringing current palm oil milling equipment (POME) order book to an estimated RM378 million. The replenishment value is within our expectation, accounting for 53% of our RM250 million assumption for FY19. No changes in FY18-19E core net profit of RM67.4 million-RM67.7million.

 

CBIP announced that its wholly-owned PalmitEco Engineering had received three letters of awards of contracts from PT Kodeco Agrojaya Mandiri on Nov 13-20, 2018. The contracts entailed the setting up of a 60 tonnes/hour conventional palm oil mill, a 200 tonnes/day kernel crushing plant and a 1,600kW biogas power generator plant over 16 months. The combined value of the contracts amounted to RM87 million.

At the same time, the group also announced that the same subsidiary had entered into a contract with PT Sanjung Makmur on Feb 7, 2019 to set up a 45 tonnes/hour continuous sterilisation palm oil mill. The contract has a value of RM45 million and is to be constructed over 18 months.

The aggregate order book replenishment value of RM132 million is within our expectation, fulfilling 53% of our full-year assumption of RM250 million for FY19. Outstanding order book of the POME segment stood at RM336 million in 3Q18. Assuming around RM90 million of the order book is recognised in 4Q18, the new contracts would bring the current order book to RM378 million. — Kenanga Research, Feb 14

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