CBIP - Unique Palm Oil Mill Player

Background:

CBIP is mainly involved in palm oil mill construction (POMC), special purpose vehicle retrofitting (SPVR) and plantation. PATAMI contribution is POMC 85% and SPVR 15%. Plantation division is still making losses as it has yet to produce fruits. The Company made PATAMI of RM98m in FY2013.

Strong orderbook of RM656m

As of end-2013, CBIP’s POMC division has orderbook of RM440m while its SPVR division at RM216m. The very strong orderbook means the Group no need to worry about sales until end of FY15. For plantation division, 4400 ha is planted as of end-2013 and total landbank is 65,000 ha.

1Q14 earnings jumped 25% to RM23.3m

Key driver behind the earnings jump is the POMC division which has registered 29% jump in PBT to RM23.7m. The POMC division seems to benefit from better sales and profit margin as its key product of Modipalm mills gain more traction in the market..

Strong net cash of RM141.0m or 52 sen per share.

CBIP has RM145m cash and only RM4m debts. With 272m shares, 11% of the share price is in cash.

Looking ahead to better FY14 (Year End Dec)

Roughly, FY14 earnings should grow 6% to RM100m based on many analyst estimate. Again, higher orderbook from POMC is expected to be the key driver for earnings.

CBIP theoretically worth RM5.15 short term and .

Items	Value (RM m)
Current business valued at 12x	972
Plantation landbank (4400 planted)	66
Plantation landbank (60600 planted)	364
Total Value	1402
No of shares	272
Value Per Share (RM)	5.15

Short term potential return is good at 11%.

Items	Value (RM m)
Current business valued at 12x	972
Plantation landbank (50000 planted)	2000
Total Value	2972
No of shares	272
Value Per Share (RM)	10.93

Long term (5 years time); looking at value of close to RM11.00 or DOUBLE.