CB Industrial Product; Buy
Price Target: RM3.30; CBP MK

CBIP’s wholly-owned subsidiary, Advance Boilers Sdn Bhd, acquired 4.05 hectares of land in Klang with factories, machineries, raw materials and related equipment from Vickers Hoskins (M) Sdn Bhd. CBIP’s internal funds will be utilised for the acquisition which costs c.RM36m (end-FY12 net cash at RM173.5m or RM0.65/share).

Vickers Hoskins is primarily in the business of manufacturing and sale of industrial boilers. We are positive on the acquisition as it is in-line with CBIP’s plan to remain focused in its E&C (engineering and contracting) division (construction and manufacturing of Modipalm mills and boilers) while aiming to grow its boiler manufacturing business. Currently, its boiler manufacturing contracts are approximately 10% of its total orderbook (RM329m as at end-3Q12).

We maintain our FY13-14 earnings estimates pending a review of Vickers Hoskins capacity. Maintain BUY on CBIP at RM3.30 TP based on 9x FY13F EPS.

Source: HwangDBS Research - 1 Apr 2013