CBIP’s 1QFY14 results were in line. We lower our forecasts slightly to account for higher startup losses at its Indonesian plantation unit. Post earnings revision and the rollover of our valuation period to CY15 (from CY14), we tweak our SOP-based FV to MYR4.95 (from MYR5.00). While we continue to be positive on CBIP’s prospects, we believe valuations are fair at these levels. Maintain NEUTRAL.
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In line. CB Industrial Product (CBIP)'s 1QFY14 core net profit was in line with our and consensus estimates, coming in at 23-24% of FY14 forecasts. No dividend was declared during this quarter.
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Core net profit rose 24.7% y-o-y, revenue contracted 18.4% y-o-y.The decline in its topline was mainly due to a 57.7% drop in revenue from the vehicle retrofitting division due to lower project completion during the period. This, however, was offset by a 22.6% rise in the oil mill engineering division caused by higher project billing. Despite the lower topline numbers, core net profit rose as a result of a higher margin of 26.7% (from 25.4% in 1QFY13) achieved at the oil mill engineering division and at the vehicle retrofitting unit of 7.2% (vs 7% in 1QFY13). This was offset slightly by a MYR2.2m pretax loss at the plantation division – caused by startup costs at its Indonesian estates.
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Tweaking earnings downwards. Despite the in-line earnings, we are revising down our FY14-15 forecasts by a slight 4-5%, after taking into account the higher losses at its plantation division in Indonesia, which were due to startup costs.
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Maintain NEUTRAL. Post earnings revision and after rolling over our valuation base to CY15 (from CY14), our SOP-based FV drops slightly to MYR4.95 (from MYR5.00). Our valuation targets are unchanged, at a 9x P/E for its associate plantation business and a 13x P/E for its oil mill engineering and vehicle retrofitting division. Although we continue to be positive on CBIP’s prospects, we believe valuations are fair at these levels. As such, we maintain our NEUTRAL recommendation on the stock.
![](https://research.osk188.com/images/14/m6z9461540988538bc7e8e6cdd.jpg)
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![](https://research.osk188.com/images/17/BA65855855807538bc7ecb6076.jpg)
![](https://research.osk188.com/images/18/mzH51244987616538bc7eef0113.jpg)
![](https://research.osk188.com/images/19/W7Po2112188259538bc7f10e863.jpg)
![](https://research.osk188.com/images/20/FaRs139880225538bc7f2ef272.jpg)
![](https://research.osk188.com/images/21/CDEL324660056538bc7f516ef8.jpg)
Source: RHB
sbanpjman8
What is this "recurring net profit" business in nature for CBIP? As far as I know, their bz is purely one off on the contract. Can anyone helps?
2014-06-02 18:08