Commendable financial results, notwithstanding higher taxation paid. If the company can obtain another 10 years of tax exemption, profitability should further improve. Coupled with a decent dividend yield of about 5%, this still a Buy call for me.
Expect some buying and support this week with shareholders getting their dividends. Waiting for it to break RM2.20 sucecesfully....interesting to see the next level of resistance...RM2.35?
Only Malaysia and Indonesia are top exporters of CPO. As such CBIP expertise is unique. There is a defensive mode in CBIP as it is now an expert and leader in its field. The future is very bright. When the earth runs out of fossil fuel Palm Oil will last for a thousand years
Seems like a new base has been formed at RM2.20. Will be interesting to see if it can break RM2.35. Company has a number of positives things going i.e. positive outlook for CPO, more new contacts and hopefully the approval for tax exemption. The current strengthening of RM may impact future earnings. Overall still a BUY for me !
only managed to collect some CBIP-WA at RM 0.36, now she shoot above RM 0.45. I hope that i can collected more but it is enough to recover my losses in XINGUAN.
Strong buying and support seen the past 2 weeks. Are Funds buying ? Are we seeing the emergence of new significant shareholder(s)? Can it break RM2.35 next week ?
Rising CPO price boosts demand for its palm oil mills
THE recent uptrend in crude palm oil (CPO) price is spurring new investments by plantation companies looking to boost palm oil production. One company that benefits from this higher investment spending is CB Industrial Product Holding Bhd (CBIP), a maker of palm oil mills.
CBIP is witnessing an improvement in orders for its palm oil mills, stemming in part from a revival in previously deferred projects by plantation and mill owners.
While the recent uptrend in crude palm oil (CPO) prices has put big plantation companies in the spotlight, companies that are associated with the palm oil business would also fare well.
The company’s major shareholder and managing director Lim Chai Beng tells StarBizWeek that this has nudged its order book to an “all time high.”
“Thanks to the recent rally in the price of CPO, our order book is now at all time high.
“We are seeing more projects that were previously deferred, coming back to life,” he says.
CBIP specialises in the engineering side of the palm oil sector, constructing palm oil mills under its patented Modipalm palm oil milling system, which commands about 20% to 25% of the Malaysian market.
While CBIP has been building palm oil mills for the large plantation players in Malaysia and Indonesia for a while now, Lim says the next growth area for the company is demand from small and medium-sized oil palm players.
“Just because we are a public listed company, many perceived that our products are expensive, but they are actually priced competitively,” he says.
He adds that there is also demand from independent palm oil millers, who in turn provide milling facilities to plantation smallholders.
Kenanga Research in a Feb 25 report, pointed out that CBIP’s palm oil mill equipment segment has “a robust order book”, with earnings that are less volatile compared to the plantation sector.
“We are optimistic on the palm oil mill equipment segment as rising CPO prices should improve orders,” it said in that report adding that CBIP is benefits from the strong US dollar as 40% of the company’s order book is denominated in US dollars.
AllianceDBS points out that CBIP’s palm oil engineering division has an order book of some RM500mil, “which is expected to keep the group busy even if they are not able to secure sizeable contracts in 2016”.
CBIP’s palm oil engineering segment makes about 75% of its total sales and about 23% from special purpose vehicles segment such fire fighting and rescue vehicles and ambulances, which the company owns 51% of the operation.
According to AllianceDBS, palm oil engineering business reaps about 23% operating margins.
It adds that CBIP’s ability to replenish its orderbook will remain the key share price driver.
CBIP’s share price has climbed by more than 10% year to date.
However, it trades at an earnings multiple of 12 times 2016 earnings, lower than the plantation industry’s multiple of of 23 times 2016 earnings.
CBIP, which has been active in oil palm cultivation in Indonesia since 2010, after disposing its oil palm plantation estates in Malaysia for more than RM200mil.
In a follow-up to that, CBIP went on an acquisition spree of land in Kalimantan Tengah, Indonesia. The company’s oil palm landbank in Indonesia totalled 70,000ha presently.
Lim says that the disposal of its oil palm plantation estates in Malaysia was because he felt that “there is no more room for expansion”.
He says that although the company’s oil palm plantation business is still loss-making, he is targeting the sector to be profitable in 2017.
“The tree age profile is young and we are still developing the land. We are targeting the first mill to be completed in the first half of 2017, that is when we will see revenue to start kicking in,” he says.
However, Lim points out that only 40,000 ha from the 70,000 ha of its landbank in Indonesia is suitable for planting.
“We are currently at the midst of selling the other 30,000 ha land,” he says.
Lim says that almost 10,000 ha of the land has already been planted, and that CBIP is aiming 6,000 ha to be planted annually.
“We are targeting to complete the development (of planting up) of the 40,000 ha of land by 2020,” he says.
Notably, CBIP is sitting on a net cash position of about RM177mil or 33.7 sen a share.
“Oil palm cultivation is part of CBIP’s diversification plan to generate recurring income aside from our mills maintenance segment,” he adds.
Lim currently is the single largest shareholder of CIBP with 32.88% stake.
There are also several institutional funds present in its shareholders list including AIA Bhd and Retirement Fund Inc (KWAP) with 4.6% and 2% stake respectively.
CBIP is also in the midst of developing its zero-discharge technology palm oil mill.
AllianceDBS said that there is a potential for CBIP to commercialise its new plantation waste management system with zero discharge by late 2016.
INDIVIDUAL PERIOD CUMULATIVE PERIOD CURRENT YEAR QUARTER PRECEDING YEAR CORRESPONDING QUARTER CURRENT YEAR TO DATE PRECEDING YEAR CORRESPONDING PERIOD 31 Dec 2015 31 Dec 2014 31 Dec 2015 31 Dec 2014 $$'000 $$'000 $$'000 $$'000 1 Revenue 196,810 206,033 554,088 600,893 2 Profit/(loss) before tax 66,027 32,812 139,594 108,446 3 Profit/(loss) for the period 46,349 27,226 102,709 97,222 4 Profit/(loss) attributable to ordinary equity holders of the parent 38,989 24,196 93,647 91,205 5 Basic earnings/(loss) per share (Subunit) 7.42 (BASIC EARNING FOR CBIP IS 7.42 CTs) 4.55 17.82 17.17 6 Proposed/Declared dividend per share (Subunit) 4.00 0.00 10.00 8.00
AS AT END OF CURRENT QUARTER AS AT PRECEDING FINANCIAL YEAR END 7 Net assets per share attributable to ordinary equity holders of the parent ($$) 1.2700
Note CBIP EARNINGS LATEST QUARTER IS A NICE 7.42 CENTS (Dolphin 1.1 cts
I got a doubt here...... the news said tat there are warrants exercising....... which need rm2.40 for the conversion..... today CBIP closed at rm2.30.... why got someone want to convert the warrants, but actually he can buy cheaper from market??? strange......
I got a doubt here...... the news said tat there are warrants exercising....... which need rm2.40 for the conversion..... today CBIP closed at rm2.30.... why got someone want to convert the warrants, but actually he can buy cheaper from market??? strange...... 04/04/2016 17:36
Thinkkfully got brain to calculate.
Yes, it is cheaper to buy mother shares cheaper at Rm2.30 than to buy warrant and then convert it. It really defy logic UNLESS there is an unknown factor behind it.
Is it because if by buying mother shares it will push up the price to elevated level too soon? So they buy warrant to convert them on the quiet even though they are paying a premium for it now?
If CBIP can eventually cross Rm4.00 or even Rm6.00 then this will be a very far sighted strategy.
Anyway, Calvin thinks CBIP will be an outstanding powerful growth stock due to ongoing El Nino.
The Performance of CBIP will be very spectacular going into year 2017 and 2018
haha... calvin, thx for ur feedback~ 333units of warrant conversion, which is neglible to push.... I don think below 5lots shares can make different on the share price, eventhough if buying from the open market....
All indicators from business fundamentals to technical / chart analysis are positive. Waiting for it to breach RM2-35 very soon and to test RM2-50. Happy investing !
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
ampabella
1,378 posts
Posted by ampabella > 2016-02-22 15:02 | Report Abuse
today solid wor