CB Industrial Products (BUY; NEW) - Leveraging on the booming palm oil sector

Stock Name: CBIP
Company Name: CB INDUSTRIAL PRODUCT HOLDING

Research House: HLG

Price Call: BUY

Target Price: 3.03

CB Industrial Products (BUY; NEW)

Leveraging on the booming palm oil sector

• CBIP is involved mainly in the: (1) Provision of engineering support,commissioning and contracting works for palm oil equipment and mills; (2)Cultivation of oil palm and production of crude palm oil and palm kernelthrough its JV entities and associates; and (3) Retrofitting special purposevehicles.
• The bases of our investment highlights for CBIP include:

1. CBIP's proven track record in the engineeringdivision, evidenced by its strong orderbook and growing revenue contributionfrom the division;
2. The bright demand prospects for palm oil mills,underpinned by both demand-pull and supply-push factors;
3. It is a safe bet and proxy to the expanding palm oilsector worldwide; and
4. Strong balance sheet.

• Excluding earnings contribution from the now disposed plantationoperations in 2011 (RM56.6m net profit, based on our estimates), our 2012-2014projected earnings indicate a 3-year CAGR of 16.5%.
• We are initiating coverage on CBIP with a BUY recommendation andSOP-derived TP of RM3.03. 

Source: HLIB Research 5 March 2012