Highest growth in profit after tax over three years
INDUSTRIAL PRODUCTS & SERVICES
CB Industrial Product Holding Bhd - Riding the commodity boom
CB Industrial Product Holding Bhd (CBIP), an integrated engineering, equipment and spare parts provider to the palm oil milling sector, is riding high on the commodity boom that has pushed crude palm prices to slightly above RM7,000 — the highest level at which the edible oil has been traded.
This is reflected in CBIP’s continuous solid earnings growth during the three-year period under review.
The company’s net profit rebounded strongly after dipping in the financial year ended Dec 31, 2018 (FY2018).
Its profit after tax (PAT) increased to RM35.5 million in FY2019 from RM23.3 million in the previous year. The growth pattern continued in the following two years, leaping to RM54.8 million in FY2020 and RM86.66 million in FY2021.
However, the company’s annual revenue came in lower at RM452.48 million in FY2019 compared with RM478 million the year before. But it then climbed to RM540.38 million in FY2020 and RM606 million in FY2021.
CBIP achieved a compound annual growth rate of 30% in its PAT in the three-year period based on the awards methodology. Therefore, it had the highest PAT growth over the three financial years in the industrial products and services sector.
The rise in CBIP’s profit also put its return on equity (ROE) on an uptrend. The company’s ROE was at 4.9% in FY2019 and increased to 7.5% in FY2020 and 11.2% in FY2021. This translated into a weighted ROE of 8.8% for the period under review.
In addition, CBIP rewarded shareholders with regular dividends in the three financial years. The board declared a dividend per share of two sen in FY2019 and four sen for FY2020 and FY2021.
The company’s share price climbed from 96 sen at end-March 2019 to RM1.52 at end-March 2022.
CBIP’s palm oil equipment and engineering segment has been supplying palm oil mills worldwide with high-quality processing parts for more than four decades. Its business model is centred around the supply of machinery and turnkey construction of both modipalm continuous sterilisation and conventional palm oil mills for local and overseas oil palm plantation companies. Among the company’s clients are Sime Darby Plantation Bhd, TH Plantations Bhd, United Plantation Bhd and Indonesia’s PT Sinarmas.
For the first quarter ended March 31, 2022, CBIP posted a net profit of RM18.4 million, a touch lower than RM18.6 million last year. Revenue came in at RM185 million, 17.6% higher than RM157.3 million last year, on account of higher revenue from its special purpose vehicles and oil palm plantation segments.
In a Bursa Malaysia filing, the group said it was optimistic about achieving satisfactory results, mainly driven by the palm oil equipment and engineering segment for the financial year ending Dec 31, 2022. This was also due to the progress of its projects secured amid a challenging business environment.
“Our strategy for the palm oil equipment and engineering segment is to grow our revenue by expanding our clientele base while developing new ones to achieve a sustainable growth path.
“We also intend to expand our sales of palm oil equipment and spare parts by developing and expanding our distribution network through strategic partnerships with local dealers,” says CBIP in its quarterly result release to the stock exchange.
On March 11, 2022, CBIP said it had acquired the remaining 30% stake, or 30 million shares, in biofuels producer Gulf Lubes Malaysia Sdn Bhd (GLM) for RM24 million in cash. It said in a bourse filing that it had entered into a share sale agreement with the shareholders of GLM, namely Satyanarayana Jampa Veera Venkata, Ramalingam Karuppaiah and Mogahid Taha Yassin, who each have a 10% stake in the company.
CBIP said completion of the acquisition — funded entirely by internally generated funds — will see GLM become a wholly-owned subsidiary of CBIP, align the interest of both parties as well as resolve the management deadlock in GLM announced on June 30, 2020.
GLM owns an 8-acre biofuels processing facility in the Port Klang Free Zone in Pelabuhan Klang, Selangor, which includes two biodiesel processing plants with an annual production capacity of 350,000 metric tonnes (MT), as well as a refined, bleached and deodorised palm oil processing plant with an annual production capacity of 250,000MT.