- CB Industrial Product Holding Bhd (CBIP) announced that it has received a Letter of Award from Felda Palm Industries Sdn Bhd.

- The Letter of Award is in respect of mechanical and electrical works for the upgrading of Felda’s palm oil mill to continuous sterilisation system.

- The contract is worth about RM15.8mil.

- We view the contract positively as it would increase CBIP’s order book and help sustain the group’s profitability.

- This is not CBIP’s first mill conversion contract from Felda Group.

- In the past, CBIP has converted about 12 of Felda’s palm oil mills.

- CBIP is expected to convert another three of Felda’s palm oil mills in FY13F.

- So far this year, we estimate that CBIP has received about RM150mil to RM200mil worth of contracts.

- The group hopes to secure roughly RM350mil to RM450mil contracts in FY13F.

- Unbilled construction sales stood at RM390mil as at end-March 2013.

- We maintain BUY on CBIP for its attractive valuations. CBIP is currently trading at FY13F PE of 8.1x and FY14F PE of 7.6x.

Source: AmeSecurities