April 18 2005 - GROWTH for CB Industrial Product Holding Bhd, whichundertakes construction and engineering of palm oil mills, is expected tocome from overseas markets.

Research house Netresearch-Asia Sdn Bhd said that on the local front,demand for new palm oil mills in Peninsular Malaysia is limited, whileSabah and Sarawak still require new mills.

"There are roughly 400 palm oil mills in operation, providing opportunityfor replacement and upgrading of existing ageing mills," Netreseach saidin an initiating coverage report on CB Industrial under the CMDF-BursaResearch Scheme.

It said the growth driver for CB Industrial will come from, among others,the Indonesian oil palm plantation sector, Papua New Guinea and otherup-and-coming palm oil producing countries such as West Africa and CentralAmerica.

Netresearch said CB Industrial’s core strength lies in its engineeringexpertise and experience.

The company has successfully developed new products and technology, namelythe continuous sterilisation process and Modipalm mill, which is jointlydeveloped with the Malaysian Palm Oil Board.

The Modipalm is suitable for smaller plantations and highly affordable dueto its smaller capacity, the research house said.

"We like CB Industrial for its established position in the palm oil millprocessing sector and its ability to undertake turnkey projects,"Netresearch said.

Its expertise, research and development strength, and successful newproprietary Modipalm products differentiate the firm from its competitors.

Netresearch also said the current tight liquidity of CB Industrial sharesshould improve with the completion of a share split and transfer to BursaMalaysia’s main board from the second board.

In the past one year, the share price of CB Industrial has declined by 19per cent from RM3.14 to RM2.53 currently.

"Based on our financial year 2005 earnings per share forecast of 28 sen,the stock currently trades at a price multiple of nine times, which isundemanding as compared to the market price multiple of 13 to 14 times,"the research house said.

Netresearch has a 'buy' call on the stock.