CB
Industrial Product Holding Berhad (CBIP) caught my attention last week
when I was searching around for good companies to invest in. I decided
to look further into its business model. CBIP is engaged in 3 business
segments being the palm oil engineering, retrofitting special purpose
vehicles and oil palm plantation and milling.
Some
of you might be scratching your head now because CBIP is not involved
in selling the day-to-day products which you get to see everyday such as
Nestle, F&N, Spritzer etc. Don't worry, if you don't feel
comfortable investing in a business which you can't understand, there
are always many other opportunities out there to serve you.
For
those who are familiar with CBIP and wish to know more about it, there
are a few things I would like to share with you from the company's
visit.
1) It
is the first publicly-listed player in the palm oil engineering
industry globally mainly focusing in Indonesia and Malaysia.
2) Palm oil engineering is CBIP's major contributor with close to 80% of revenue contribution.
3) CBIP
is a one-stop centre turnkey contractor for Modipalm Continuous
Sterilization palm oil mills. Its services and products are
earthwork/site preparation, civil construction, mill engineering and
supply, installation, testing and commisioning of machinery and
equipment.
4) Key
benefits of CBIP's Modipalm Continuous Sterilization palm oil mills are
higher oil extraction rate, lower operating costs, lower maintenance
costs and better safety.
5) There has been a total of 102 Modipalm Continuous Sterilization mills constructed by CBIP to date.
6) Profit
before tax has grown from RM 71 million in FY11 to RM 140 million in
FY15. However, net profit after tax has remained relatively stable in
the past 5 years at about RM 100 million. The main culprit, which pushed
up CBIP's tax payable is the expiry of pioneer tax status.
7) There
has been an influx of new clients. In FY11, new clients accounted for
only 29%. However, in FY15, it has increased to 70%.
8) Most
of the plantations are still young and immature, ranging from 0-5
years. The management expects this segment to contribute significantly
in a few years' time.
This
blog post is to serve those that are familiar with CBIP. If you think
that it's hard to understand this business, even after reading the
annual report, my advice is to stay away from investing in this
company.
CBIP (7076) - 8 Things I Learned From CBIP's Visit
http://www.valueinvestingstock.com/#!8-Things-I-Learned-From-CBIPs-Visit/cour/57550eab0cf24c9615a22da1
