CB Industrial Product Holdings Bhd (CBIP)’s 9MFY12 results were above our expectation, with its core net profit of RM75.5m making up about 82% of our full-year estimate. The better-than-expected results were due to higher than expected contribution from the SPV segment. As management has declared a second interim tax exempted dividend of 5.0 sen, we are adjusting our full-year dividend estimate to 25.0 sen per share to reflect the higher dividend. We are fine-tuning our forecasts to reflect the better than expected SPV segment contribution. We maintain buy call with a higher FV of RM3.31, pegged to the stock’s 5-year average PER of 9x.
Above forecast. CBIP’s 9MFY12 results beat our expectation, clocking in a YTD core net profit of RM75.5m that met 82% of our full-year target on the back of a 62% jump in revenue to RM373.6m. The 9M net profit of RM215.1m included a disposal gain of RM139.6m. However, stripping off the gains from its discontinued plantation operations in Sarawak, the company’s 9M net profit would have normalised to RM75.5m. Its 3QFY12 core net profit was higher at RM27.1m (-1.0% y-o-y, +14.5% q-o-q) on better contribution from both palm oil equipment and special purpose vehicle (SPV) segments while that from its palm plantation segment fell due to lower production and lower CPO prices. Both the palm oil equipment and SPV segments had total unbilled sales of RM380m and RM295m respectively as at end-September 2012, equivalent to 2.1x the group’s total FY11 revenue.
Second interim dividend of 5.0 sen. CBIP is proposing a second interim tax exempt dividend of 5.0 sen. Including the first interim tax exempt dividend of 10.0 sen less 25% tax, bringing the total net dividend to 15.0 sen per share for 9MFY12. We are moving up our FY12 net dividend estimate to 25.0 sen for FY12 to incorporate the surprise dividend following the disposal of CIP’s Sarawak plantation operation. This would translate into a decent gross dividend yield of 12.3% (or net dividend yield of 9.2%) for FY12.
Acquiring another piece of land in Indonesia. Following the purchases of plantation land in May and August this year, the company has also announced its third land acquisition in Indonesia, for a sum of RM7.4m. The said 14,769.75 ha land is a piece of greenfield in Kalimantan (please see the green zone in Figure 2). This purchase will boost the company’s total plantation landbank to about 60,000 ha. Management has indicated that CBIP will embark on aggressive planting plan on about 10,000 – 13,000 ha per annum starting from 2013.
Maintain BUY, RM3.31 FV. We continue to like CBIP’s: i) prudent management, ii) strong orderbook in its manufacturing and SPV segments, and iii) aggressive expansion in palm oil plantations in Indonesia. We are fine-tuning our forecasts to reflect a better-than-expected SPV segment contribution. Maintain BUY on CBIP, with higher FV RM3.31, pegged to a five-year average PER of 9x on the company’s FY13 earnings. BUY.
Above forecast. CBIP’s 9MFY12 results beat our expectation, clocking in a YTD core net profit of RM75.5m that met 82% of our full-year target on the back of a 62% jump in revenue to RM373.6m. The 9M net profit of RM215.1m included a disposal gain of RM139.6m. However, stripping off the gains from its discontinued plantation operations in Sarawak, the company’s 9M net profit would have normalised to RM75.5m. Its 3QFY12 core net profit was higher at RM27.1m (-1.0% y-o-y, +14.5% q-o-q) on better contribution from both palm oil equipment and special purpose vehicle (SPV) segments while that from its palm plantation segment fell due to lower production and lower CPO prices. Both the palm oil equipment and SPV segments had total unbilled sales of RM380m and RM295m respectively as at end-September 2012, equivalent to 2.1x the group’s total FY11 revenue.
Second interim dividend of 5.0 sen. CBIP is proposing a second interim tax exempt dividend of 5.0 sen. Including the first interim tax exempt dividend of 10.0 sen less 25% tax, bringing the total net dividend to 15.0 sen per share for 9MFY12. We are moving up our FY12 net dividend estimate to 25.0 sen for FY12 to incorporate the surprise dividend following the disposal of CIP’s Sarawak plantation operation. This would translate into a decent gross dividend yield of 12.3% (or net dividend yield of 9.2%) for FY12.
Acquiring another piece of land in Indonesia. Following the purchases of plantation land in May and August this year, the company has also announced its third land acquisition in Indonesia, for a sum of RM7.4m. The said 14,769.75 ha land is a piece of greenfield in Kalimantan (please see the green zone in Figure 2). This purchase will boost the company’s total plantation landbank to about 60,000 ha. Management has indicated that CBIP will embark on aggressive planting plan on about 10,000 – 13,000 ha per annum starting from 2013.
Maintain BUY, RM3.31 FV. We continue to like CBIP’s: i) prudent management, ii) strong orderbook in its manufacturing and SPV segments, and iii) aggressive expansion in palm oil plantations in Indonesia. We are fine-tuning our forecasts to reflect a better-than-expected SPV segment contribution. Maintain BUY on CBIP, with higher FV RM3.31, pegged to a five-year average PER of 9x on the company’s FY13 earnings. BUY.
Source: OSK
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