- CB
Industrial Product Holding Bhd’s (CBIP) subsidiary, Modipalm Engineering Sdn
Bhd has received an RM18mil Letter of Award from Felda Palm Industries Sdn Bhd
to convert its Mempaga Palm Oil Mill in Bentong, Pahang into Modipalm.
- We
believe that this is the first contract received by CBIP in FY13F.
- We view
this contract positively as it would sustain the group’s construction order
book and support net profit growth.
- In
addition, there is potential for CBIP to win more mill conversion contracts
from Felda Group.
- In total,
Felda has 70 palm oil mills, which are quite old.
- This is
not CBIP’s first contract from Felda Group.
- In 2007,
CBIP secured an RM79mil contract from Felda Group to build seven Modipalm mills
with a capacity of 45 tonnes/hour each.
- As at end
September 2012, CBIP’s unbilled construction order book stood at RM329mil.
- Up to
9MFY12, we believe that the group had secured about RM220mil worth of
contracts.
- Going
forward, CBIP is positioned to receive more contracts from plantation companies
in Indonesia due to expansions in mature areas.
- We
maintain a BUY on CBIP for its undemanding FY13F PE of 9x.
Source: AmeSecurities
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