Bursa Malaysia Stock Watch

CB Industrial Products (BUY; NEW) - Leveraging on the booming palm oil sector

kltrader
Publish date: Mon, 05 Mar 2012, 10:06 PM
kltrader
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CB Industrial Products (BUY; NEW)
Leveraging on the booming palm oil sector
  • CBIP is involved mainly in the: (1) Provision of engineering support,commissioning and contracting works for palm oil equipment and mills; (2)Cultivation of oil palm and production of crude palm oil and palm kernelthrough its JV entities and associates; and (3) Retrofitting special purposevehicles.
  • The bases of our investment highlights for CBIP include:
  1. CBIP's proven track record in the engineeringdivision, evidenced by its strong orderbook and growing revenue contributionfrom the division;
  2. The bright demand prospects for palm oil mills,underpinned by both demand-pull and supply-push factors;
  3. It is a safe bet and proxy to the expanding palm oilsector worldwide; and
  4. Strong balance sheet.
  • Excluding earnings contribution from the now disposed plantationoperations in 2011 (RM56.6m net profit, based on our estimates), our 2012-2014projected earnings indicate a 3-year CAGR of 16.5%.
  • We are initiating coverage on CBIP with a BUY recommendation andSOP-derived TP of RM3.03. 

Source: HLIB Research 5 March 2012
CBIP (7076)
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