- CB Industrial Product Holding Bhd (CBIP) announced that it has received a Letter of Award from Kemabong Sdn Bhd for the turnkey construction of a 45 tonnes/hour Modipalm palm oil mill in Kunak, Sabah.

- The contract is worth RM40.5mil.

- This is CBIP’s second announcement on its palm oil mill contracts in a week.

- In total, CBIP has won RM56.3mil worth of contracts this week.

- While the previous contract was in respect of converting a mill, the turnkey contract will see CBIP developing the palm oil mill from scratch.

- Kemabong Sdn Bhd is based in Malaysia. We believe that about 95% of CBIP’s customers are Malaysian and Indonesian companies.

- Plantation companies in Central America and Cargill account for the balance 5%.

- As mentioned in a previous report, we reckon that CBIP would receive RM350mil to RM450mil contracts in FY13F compared with RM280mil in FY12.

- This would sustain the group’s profitability in the coming few years. Outstanding construction billings stood at RM390mil as at end-March 2013.

- We maintain BUY on CBIP for its undemanding valuations as reflected in its FY14F PE of 7.8x.

Source: AmeSecurities