Wisdom Wise

CBIP Slow but Steady

Ben Gan
Publish date: Sun, 03 Apr 2016, 03:19 PM
Ben Gan
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The FBM KLCI closed at 1750 on 24.12.2013. Last Friday 1.4.2016, it closed at 1711. This means the market had dropped 39 points or 2.23% during this period.

Via my post dated 24.12.13 in my blog, Wisdom Wise, I recommended CBIP as a good stock to buy and keep at RM3.20. 

Last Friday, CBIP closed at RM2.28. In year 2014, it gave a bonus issue of 1 for 1 and free warrants of 1 for 3 after the bonus issue. The warrants were last traded at 47.5 sen per warrant. Factored in the dividends paid during this period. it works out that for every 1000 shares you bought at RM3,200 the value of it would have gone up to RM5,013. This means an upside of 57% in 2 years & 3 months. Although this is short of anything fantastic, it has beaten the market by a big margin, hands down. 

What's in store for CBIP? In the 4th quarter of 2015, EPS came in at 7.42 sen. In the corresponding quarter of the previous year, EPS was 4.14. This is up 79%!  Not bad by any standard.

As at 31.12.2015, some key statistics & metrics of CBIP were as follows:

Current assets: RM421.88 ml
Current Liabilities: RM154.08
Current Ratio: 2.738
Cash RM196.91 ml
Share Capital RM269.124
Total shares issued 538.248 ml (Par Value 50 sen per share)
Borrowings RM19.728 ml
Total liabilities: RM154.079 ml

From the info mentioned above, it can easily be seen that the stock has a strong balance sheet with cash alone enough to cover its total liabilities. 

The management in its filings with Bursa has indicated that the planation sector of the group is likely to add profits to its bottom line in 2016

I expect that its 1st quarter ended 31.3.2016 to be commendable, and that 2016 would be a great year for the stock. 

TA-wise, the chart shows that the stock is in a gradual uptrend. The special dividend of 4 sen paid on 15.3.2016 is a harbinger of better things to come. 

Investment is never without risk. Anything can happen. You buy, sell or hold at your own risk absolutely. 

If you wish to join my Super Telegram Group, use the link below. Please upgrade your profile picture to your personal photo before joining, and please use your actual name. Fanciful names are not acceptable. 




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Discussions
2 people like this. Showing 12 of 12 comments

calvintaneng

CBIP

Great post!

CBIP IS A GREAT GROWTH STOCK

It has a highly defensive Moat in Modipalm!

Its Modipalm Mill is par excellence in quality!

1) It saves on man power.
2) It saves on time.
3) It extracts the most Oil compared to all other millers.
4) It is economical to set up.
5) Assembling to operation takes only a 4 short month.

See www.youtube.com/watch?v=FDpy4nwFarw.

2016-04-03 15:56

Dolphin1

Why must buy expensive stock? Why not choose cheaper 1?

2016-04-03 16:22

calvintaneng

Dolphin1 Why must buy expensive stock? Why not choose cheaper 1?
03/04/2016 16:22

calvintaneng answers,

Price is what you pay but value is what you get

SEE

CBIP has a consistent 15% growth yearly while Dolphin is still untested.

CBIP P/E is lower than Dolphin. So CBIP is a more powerful growth stock

MODIPALM Has Already Entrenched Its Position As The Top Palm Oil Mill Manufacturer. So the defensive Moat is hard to assail.

Price is what you pay. But Real Value is What We Want.

CBIP is a Very Valuable Company Going Forward.

POWERED BY EL NINO & LA NINA.

2016-04-03 16:33

saschl

Mr Calvin, in Eastern Times News (Malaysia Chinese Newspaper), today reports that according to the Chairman of Palm Oil Traders Association, Batu Pahat, due to El Nino, Oil Palm harvest has dropped by 50% and Plam oil extraction ratio has dropped from 20% to 18%, do you think it is necessary to reevaluate your current very positive optimism about the effects of high CPO price to all the Oil Palm counters? Thkq!

2016-04-03 17:11

calvintaneng

saschl

Mr Calvin, in Eastern Times News (Malaysia Chinese Newspaper), today reports that according to the Chairman of Palm Oil Traders Association, Batu Pahat, due to El Nino, Oil Palm harvest has dropped by 50% and Plam oil extraction ratio has dropped from 20% to 18%, do you think it is necessary to reevaluate your current very positive optimism about the effects of high CPO price to all the Oil Palm counters? Thkq!
03/04/2016 17:11

Calvin answers,

My position is as fixed as Mt Gunung Tahan.

I already know that in early months of 2016 FFB harvest will drop a lot. But towards the 2nd half of 2016 there will be bountiful harvest of FFB to compensate for those bleak months.

Note:

If you can see 60 foot oil palm suffer losses then what happens to maize, corn, soy and sun flower?

Don't you think they got wipe off totally?

2016-04-03 18:05

saschl

Mr Calvin, Ok Thkq I know what u mean, as I've limited resources, I'll go for JTiasa (in Sarawak, as 3 qtrs of Swk is not affected by El Niño) and CBIP, hope I have made the correct choice!

2016-04-03 18:10

calvintaneng

Posted by saschl > Apr 3, 2016 06:10 PM | Report Abuse

Mr Calvin, Ok Thkq I know what u mean, as I've limited resources, I'll go for JTiasa (in Sarawak, as 3 qtrs of Swk is not affected by El Niño) and CBIP, hope I have made the correct choice!

Calvin thinks if you can just sit tight with these 2 stocks you will do Very Well in coming months till end of 2017. By End 2017 or early 2018 when the Market is going mad over all Oil Palm stocks you can slowly sell into strength for at least 50% to 100% profit.

I wish all at i3 Forum who follow this Uptrend of CPO prosper immensely.

2016-04-03 18:20

saschl

Calvin, once again Thkq!

2016-04-03 18:49

JT Yeo

I still hold my view that CBIP moving into plantation is not the best strategy, unless they have great justification for taking the cash they generated from palm oil mill and throw it to a commodity sector that generate dismal ROE

2016-04-03 19:24

calvintaneng

Posted by JT Yeo > Apr 3, 2016 07:24 PM | Report Abuse

I still hold my view that CBIP moving into plantation is not the best strategy, unless they have great justification for taking the cash they generated from palm oil mill and throw it to a commodity sector that generate dismal ROE


Calvin says,
I think the best would be returning cash as higher dividend to shareholders.
Since they put into into Oil Palm cultivation they are still within similar industry, so should be ok.

It is better than those that diversify into completely different industries they are not competent in - say Oil and Gas?

2016-04-03 20:03

tonylim

Top glove use their cash to buy into real estate
I would do that too

2016-04-03 21:15

chl1989

Indeed a very solid stock, good div yield, healthy cash flow and balance sheet plus its outstandingly high roic (>30%). However, looking at its Ebit/EV (~12%), it seems like it is no longer dirt cheap. Based on dcf, at the current price, market is expecting it to grow by 15% for the next 5 years, 5% for another five years then 3% for the rest of the business life. Not sure how well they can outperform the expectation. Any advice from sifu ben?

2016-04-05 01:19

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