CB Industrial Product Holding Bhd
(April 17, RM2.10)
Maintain hold, with a fair value of RM2.33: CB Industrial Product Holding Bhd (CBIP) announced that it had secured a contract from PT Niagamas Gemilang to design, commission and construct a Modipalm mill.

The capacity of the mill is 30 tonnes per hour but it can be expanded to 60 tonnes per hour. The contract value is RM25.5 million. This is CBIP’s third announcement of a new Modipalm contract this year.

In early April, CBIP received a RM49.8 million contract from United Plantations Bhd while in January, the group won a RM31.3 million contract from Thai Eastern Trat Co Ltd.

In Bursa Malaysia’s announcement, CBIP said the PT Niagamas Gemilang deal is the 100th Modipalm mill order since its inception a decade ago.

We view the award of the contract positively as it would replenish CBIP’s order book and sustain its profits.

We estimate that CBIP has received RM152.9 million contracts year-to-date. We have assumed that the group would win RM270 million new contracts in financial year 2015 forecast (FY15F), which is the same as FY14.

We are not forecasting any growth in new contracts in FY15F as some plantation companies may defer or postpone their plans to build mills in view of weak crude palm oil prices.

Unbilled construction order book of CBIP’s mill division stood at RM445 million as at end-December 2014 compared with RM500 million as at end-September 2014.

The unbilled sales of RM445 million are expected to last the group for 12 months.

The group is currently trading at fully diluted FY15F price earnings ratio (PER) of 13.2 times and FY16F PER of 12.1 times. — AmResearch, April 17.

This article first appeared in The Edge Financial Daily, on April 20, 2015.