Results 

1Q13 net profit of RM18.7m (yoy: -24.6%; qoq: +15.7%) accounted for 19.9% and 19.8% of our and consensus fullyear estimates. We consider the results within expectations as 1Q is seasonally weaker.

Deviations 

Largely in line.

Dividend 

Declared 1st interim single-tier DPS of 5 sen. For the fullyear, we are projecting a total DPS of 15 sen, translating to a projected yield of 5.1%.

Highlights 

YoY. Despite revenue rising by 30.9% (mainly on higher contribution from special purpose vehicle division), 1Q13 net profit declined by 24.6% to RM18.7m mainly on the back of the absence of plantation earnings. Stripping off RM6m plantation net profit in 1Q12, the earnings growth in 1Q13 was flattish on a yoy basis. 

QoQ. 1Q13 net profit rose by 15.7% to RM18.7m mainly on the back of higher contribution from the oil mill engineering division which more than offset a slightly lower contribution from the special purpose vehicle division and associate earnings.

Risks 

• Sharp decline in oil mill engineering contracts; and 
• Steep rise in raw material prices, in particular, steel plates.

Forecasts 

Maintained.

Rating

BUY 

Positives – (1) Proven track record; (2) Favourable demand outlook for palm oil mills; and (3) Strong balance sheet.

Negative – Low share liquidity.

Valuation 

SOP-derived TP maintained at RM3.42 (see Figure 3). We continue to like CBIP for: (1) Its bright fundamentals (based on our estimates, CBIP has order book of RM272m and RM425m for its oil mill engineering and special purpose vehicle divisions respectively); (2) Undemanding valuation (at 2013-14 P/E of 8.5x and 8.3x); and (3) Potential windfall from its cash pile. Maintain BUY

Source: Hong Leong Investment Bank Research - 03 Jun 2013