CB Industrial Product; Buy; RM2.49
Price Target: RM3.00; CBP MK

CBIP has clinched a RM44.7m contract from Syarikat Ladang Sungai Terah Sdn Bhd which is based in Kelantan for a full turnkey factory (utilising the Modipalm mill) with capacity of 30 tonnes/hour (RM42.6m cost) and another extension of 15 tonnes/hour (RM2.1m).

We understand CBIP has strong prospects for more order wins. Demand for Modipalm mills has improved steadily with the mill's capability of producing at higher Oil Extraction Rates (OER) for clients. With its strong balance sheet (net cash RM0.86/share with completion of disposal of Sachiew and Empresa estates), high ROE of 21%, 21% net margin, we consider current valuations at 7x forward earnings attractive. Maintain Buy with SOP-based RM3.00 TP.

Source: HwangDBS Research 27 March 2012