Thursday 12 July 2012

CB Industrial Product - Receives US$15.9mil contract from PT Astra Agro Hold


- CB Industrial Product Holding Bhd (CBIP) announced that it has received a Letter of Award from PT Astra Agro Lestari to design and commission a 45 tonnes/hour Modipalm mill.

- The value of the contract is US$15.9mil or RM50.7mil.  

- This is the fifth announcement on award of contracts that CBIP has made so far this year.

- In June, CBIP made three announcements on the award of contracts from various companies like Jaya Tiasa Holdings Bhd, PT Swakarsa Sawit Raya, Wilmar International and Sime Darby.

- The contracts awarded by Jaya Tiasa and PT Swakarsa were in respect of M&E (mechanical and engineering) works while the contracts from WIlmar and Sime Darby were related to boilers.

- We view the award of contract from PT Astra Agro Lestari positively as it would sustain the group’s profit growth by increasing its construction order book.  

- We estimate that each contract takes between 12-18 months to complete. 

- As at end-March 2012, unbilled sales stood at RM356mil. This is roughly 1.13x of the mill
construction division’s turnover in FY11.
- Going forward, CBIP plans to secure about RM500mil worth of projects this year. Demand is expected to come from Indonesia and Papua New Guinea.  

- We maintain a HOLD on CBIP as its PE valuation would rise following the fall in plantation profits. The disposal of the plantation subsidiaries for RM268.1mil was completed in May 2012.  


Source: AmeSecurities

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