-  CB Industrial Product Holding Bhd (CBIP) announced that it was awarded a RM33mil contract from PT Bumitama Gunajaya Agro.

-  The contract involves the construction of a 60 tonnes per hour Modipalm palm oil mill in Central Kalimantan, Indonesia.

-  We view the award positively as it would increase CBIP’s construction order book and sustain its long-term profit growth.

-  Also, we believe that this is CBIP’s first contract from Bumitama.

-  Year-to-date, we estimate that CBIP has secured RM320mil worth of contracts.

-  In FY12, the group received RM280mil worth of contracts.

-  Unbilled order book stood at RM420.9mil as at end-June 2013.

-  This is about 0.8x of the mill division’s revenue in FY12. Each contract normally lasts between 12 and 18 months.

-  CBIP is also enjoying positive demand from companies in South America and Africa.

-  The group has six contracts from those regions currently. We estimate that about 5% of CBIP’s customers are from South America and Africa.

-  We maintain a BUY on CBIP for its undemanding valuations. The group is currently trading at a FY14F PE of 8x. 

Source: AmeSecurities