18/06/2012 (The Star) - Palm oil mill expert, CB Industrial Product Holdings Bhd (CBIP) will focus on increasing its order book for its Modipalm mills in Malaysia and overseas while pursuing acquisitions of greenfield landbank in Indonesia for oil palm plantations this year.

Managing director Lim Chai Beng said the current strong interest to cultivate oil palm especially in Indonesia, Central America and Africa as a mean to eradicate poverty would provide CBIP with the opportunity to increase its order book.

CBIP's list of clients include well-known plantation companies such as Felda Group, Tradewinds Plantation, Wilmar Group, PT Astra Agro Lestari, PT Minamas Group owned by Sime Darby Bhd, PT Agro Indomas Group and PT TH Indo Plantations which is owned by Lembaga Urusan Tabung Haji.

Lim told StarBiz in an interview that CBIP this year would be looking at a new market segment while targeting at older and under-performing mills especially in Malaysia and Indonesia.

Lim: ‘We are now cash rich following the disposal of our oil palm estates.’

In addition, the group expects increasing demand for back-up boiler system as more palm oil mills seek to minimise the risks of down time.

For the overseas market, he said CBIP would be able to cater for the construction of Modipalm mills from as low as four-tonne per hour mill in Africa and Central America where palm oil plantations are still in their infancy.

In Indonesia, the Modipalm mill unit can be built up to the required specification of either 40-tonne, 60-tonne or 120-tonne per hour mill, explained Lim.

Depending on the scope and specification of supply, the price for the Modipalm mill can range from RM40mil to RM70mil per unit.

On the group's plantation division, Lim said CBIP no longer had any oil palm plantation estates in Malaysia following the recent disposal of its entire stake in Sachiew Plantations Sdn Bhd and Empressa (M) Sdn Bhd.

“We are now cash rich with about RM200mil following the disposal of our local oil palm estates,” he said, adding that the company was open to new acquisitions of greenfield land bank especially in central Kalimantan, Indonesia.

Lim pointed out that CBIP was hopeful of acquiring additional new land bank in Indonesia this year.

Its latest acquisitions in Indonesia are PT Berkala Maju Bersama (BMB) and PT Jaya Jadi Utama (JJU), which will add 13,645ha and 19,129ha respectively.

Together with the group's existing plantation PT Sawit Lamandau Raya (SLR) in Indonesia, total plantable hectarage under its subsidiaries is 37,273ha.

In addition, its 50% joint venture in Solar Green Sdn Bhd has 5,567ha while its associate companies, Kumpulan Kris Jati Sdn Bhed and Bantera Bahagia Sdn Bhd have a combined 20,855ha.

CBIP plantation division plans to plant 1,300ha in SLR while preparing the nurseries for BMB and JJU for the current year, said Lim.

The annual planting for BMB and JJU is expected to be 5,000ha per year.

By 2018, CBIP group is targeting to have four 45-tonne per hour palm oil mills at its Indonesian plantations.

Given the sizeable landbank the group has in Indonesia for oil palm cultivation, Lim said that CBIP could easily become a mid-sized plantation player if all of the hectarage were planted.

On the group's dividend policy, he said CBIP would continue to maintain one third of its net profit as dividend.

“We have managed to make an average dividend payout of 28% for the past five years and hope to continue to do so moving forward,” added Lim.

As at end-December last year, Lim said there was a sizeable unbilled sales from its engineering and contracting division of about RM371mil, which is equivalent to 1.8 times FY2011 project turnover given more mechanical projects with higher margin.

“We therefore expect higher revenue and profit for FY2012 in view of sizeable unbilled contract value,” he added.