Kenanga Research ups CBIP target price to RM4.80 on Liberian contract win

by **Cals** Tue 08 Apr 2014, 12:57

Business & Markets 2014

Written by Ahmad Naqib Idris Adzman Shah of theedgemalaysia.com

Tuesday, 08 April 2014 10:25

KUALA LUMPUR (Apr 8): Kenanga Investment Bank Bhd maintained its “outperform” call on CB Industrial Product Holding Bhd (CBIP) at RM4.57 with a higher target price of RM4.80 (from RM4.42).
The target price upgrade followed CBIP’s announcement of a RM38.5 million contract award by Sime Darby Bhd to construct a 30 metric tonnes per hour continuous sterilisation palm oil mill at Grand Cape Mount Estate, Liberia.
In a statement to the exchange Monday, the company said that its wholly-owned subsidiary, Modipalm Engineering Sdn Bhd had received the Letter of Acceptance from Sime Darby Plantation Sdn Bhd for the construction of the palm oil mill.
“We are positive on the news as this should further strengthen CBIP’s orderbook.
“Assuming EBIT margin of 23% for this project, this should translate into RM8.9m to CBIP’s bottom line,” said the research house in a note today.
With the contract win, Kenanga said that CBIP’s orderbook is now boosted to an estimated level of RM500 million.
It added that the larger orderbook provides earnings visibility for CBIP’s palm oil manufacturing division up to 3QFY15.
“We continue to like CBIP as it is poised to capture strong demand for palm oil mills in 2014 and for its steady margin improvement historically,” said Kenanga.
The research house added that CBIP’s liquidity and market capitalisation have exceeded RM1.2 billion, which may attract the attention of larger funds in the near-term.