Results

• 4Q17 core net profit of RM20.8m (qoq: +24.5%; yoy: - 40.4%) took FY17 core net profit to RM84.9m (-8.9%).

Deviations

• The results came in within our expectation, accounting for 96.7% of our forecast. Against the market, the results came in below, accounting for only 90.6% of consensus estimates.

Dividend

• None for the quarter.

Highlights

• QoQ… 4Q17 core net profit increased by 24.5% to RM20.8m mainly on the back of higher contribution from oil mill engineering (post adjustment for forex losses) and SPV divisions.

• YoY… Despite a 26.4% increase in revenue (driven mainly by higher revenue contribution from SPV division), 4Q17 core net profit declined by 40.4% to RM20.8m mainly on the back of slow project replenishment at the oil mill engineering division and JV and associate losses.

• YTD… Although revenue increased by 17.5% (driven mainly by higher revenue contribution from SPV division), FY17 core net profit declined by 8.9% to RM84.9m mainly on slow project replenishment at the oil mill engineering division.

Orderbook… As at 31 Dec 2017, orderbook at the palm oil mill engineering and SPV divisions stood at RM426m and RM130m, translating to orderbook cover ratios of 1.2x and 0.4x respectively.

Risks

• Sharp increase in steel plate prices;

• Slowdown in demand for palm oil mills;

• Lower-than-expected FFB production and oil extraction rate at the JV and associate levels.

• Lower-than-expected dividend.

Forecasts

• Maintained.

Rating

BUY ( ↔ )

• Despite recent earnings setback, we continue to like CBIP for its undemanding valuations (in particularly, following recent share price correction) and healthy balance sheet. At current share price of RM1.68, CBIP is trading FY18-19 P/E of 10.1x and 9.8x respectively.

Valuation

• SOP-derived TP lowered by 2.3% to RM2.08 to reflect its latest net cash position (see Figure 4).

Source: Hong Leong Investment Bank Research - 1 Mar 2018