- CB Industrial Product Holding Bhd (CBIP) has received a Letter of Award from Thai Eastern Trat Co Ltd for the design, supply and commissioning of a Modipalm mill in Mueang Trat, Thailand.

- The value of the contract is RM31.3mil.

- We view this positively as the contract would replenish the group’s order book and sustain its profitability.

- We believe that this is CBIP’s first contract in FY15F. We also think that this is CBIP’s first contract from a plantation company in Thailand.

- We estimate that about 20% to 30% of the group’s contracts are from Africa, Central/South America, Papua New Guinea and Thailand while the balance is from Malaysia and Indonesia.

- We reckon that CBIP secured more than RM300mil worth of contracts in FY14F. CBIP received RM320mil contracts in FY13 compared with RM280mil in FY12.

- Unbilled sales of CBIP’s mill manufacturing division stood at RM465mil as at end-June 2014, which is enough to sustain the group’s turnover for a year.

- Maintain HOLD on CBIP as the group is likely to receive fewer contracts going forward. Due to sluggish CPO prices, plantation companies could be delaying their capex plans.

Source: AmeSecurities