CB Industrial Product Holding (CBIP) announced that it has received two contracts amounting to RM131.7mil in total from Indonesian companies.
The first contract of RM87.0mil was awarded by PT Kodeco Agrojaya. The contract involves the construction of a conventional palm oil mill, palm kernel crushing plant and biogas power plant. The three plants will be delivered in 16 months’ time.
The second contract of RM44.7mil was awarded by PT Sanjung Makmur. The contract involves the construction of a Modipalm mill with a capacity of 45 tonnes per hour. The mill will be delivered in 16 months’ time.
We view the award of the contracts positively as they would replenish CBIP’s order book and sustain the group’s profitability.
Unbilled order book of the mill manufacturing division stood at RM336mil as at endSeptember 2018. This is enough to keep CBIP busy for a year.
We are not revising CBIP’s FY19F net profit forecast as we have assumed that CBIP would receive RM230mil mill manufacturing contracts in FY19F. This is the same as FY18. We believe that most of CBIP’s mill manufacturing contracts would come from Indonesia.
CBIP’s order book has stagnated since FY16. It is increasingly difficult to boost the order book as plantation companies have been reducing new plantings of oil palm in Indonesia due to stringent environmental guidelines.
Maintain SELL on CBIP with a fair value of RM0.95/share.
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