• We are ceasing coverage on CB Industrial Product due to a reallocation of internal resources. Our last call was SELL with MYR0.85 TP. Prospects do not look enticing at the current juncture, with a dwindling engineering orderbook and losses at its downstream and plantation divisions.

• Outstanding orderbook as at 4Q22 for CBP’s engineering division stood at MYR261m (end-1H22: MYR299m) while its retrofitting division’s orderbook stood at MYR339m (vs MYR95m in 3Q22).

• Big losses at downstream operations. CBP’s Tanjung Langsat plant recorded a loss of MYR43m in FY22, due largely to trading losses on positions taken on its PO feedstock caused by the fall in CPO prices.

• Plantation division remained in the red, with a core pre-tax loss of MYR12.8m in FY22, on the continued impact of the tax policies in Indonesia as domestic CPO prices took some time to close the gap with international prices.

• Ceasing coverage. Our most recent recommendation was SELL, with a TP of MYR0.85 based on an unchanged 8x FY23F P/E. Our TP also took into account an ESG discount of 20%, given its ESG score of 2.0.

Source: RHB Research - 12 May 2023