- CB Industrial Product Holding Bhd (CBIP) announced that it has received a Letter of Award from PT Astra Agro Lestari to design and commission a 45 tonnes/hour Modipalm mill.
- The value of the contract is US$15.9mil or RM50.7mil.
- This is the fifth announcement on award of contracts that CBIP has made so far this year.
- In June, CBIP made three announcements on the award of contracts from various companies like Jaya Tiasa Holdings Bhd, PT Swakarsa Sawit Raya, Wilmar International and Sime Darby.
- The contracts awarded by Jaya Tiasa and PT Swakarsa were in respect of M&E (mechanical and engineering) works while the contracts from WIlmar and Sime Darby were related to boilers.
- We view the award of contract from PT Astra Agro Lestari positively as it would sustain the group's profit growth by increasing its construction order book.
- We estimate that each contract takes between 12-18 months to complete.
- As at end-March 2012, unbilled sales stood at RM356mil. This is roughly 1.13x of the mill
construction division's turnover in FY11.
- Going forward, CBIP plans to secure about RM500mil worth of projects this year. Demand is expected to come from Indonesia and Papua New Guinea.
- We maintain a HOLD on CBIP as its PE valuation would rise following the fall in plantation profits. The disposal of the plantation subsidiaries for RM268.1mil was completed in May 2012.
Source: AmeSecurities