• CGB will be leveraging on the rising demand for adhesive tapes as the group is already operating a maximum capacity and looks to ramp up their production by 3.5x to 70.0m sqm of tapes p.a.

• Turnaround in FY22f is largely on the cards, backed by the construction segment’s outstanding orderbook of RM410.1m, while FY23f will gain further strength from their on-going manufacturing segment expansion plans.

• CGB could justify by pegging its FY23f EPS of 14.3 sen to P/E of 9.0x, arriving at a fair value of RM1.29.

Key highlights

• Market leader in industrial tapes and label stocks. With 50 years of operational experience, CGB evolved into a one-stop solution provider for crepe paper masking. Based on FY21 revenue of RM60.1m from the manufacturing segment, CGB commands approximately 60.0% market share of the masking tape business in Malaysia. Their products are also sold to international markets mainly in the East Asia & South East Asia regions.

• Ramping up production capacity. CGB will be undertaking an expansion of their current operations by relocating their operations from Perai to Sungai Petani, Kedah. The addition of new machineries would bump their production capacity to 70.0m sqm of tapes p.a. (from 20.0m sqm of tapes p.a.).

• Backed by sturdy orderbook. To-date, CGB is supported by more than a handful of local construction contracts with combined outstanding value of RM410.1m. This represents a healthy orderbook-to-cover ratio of 8.7x against FY21 construction revenue of RM46.9m will provide strong earnings visibility over the next 3 years.

Source: Mplus Research - 29 Sept 2022