Shah Alam: CB Industrial Product Holdings Bhd (CBIP) is expected to secure up to RM500 million worth of contracts for its palm oil engineering business that would help to fuel double-digit revenue growth this year.

“Locally, especially in Peninsular Malaysia and Sabah, there are a lot of ageing mills which are not efficient. Many are looking to spend capital to revamp their mills, this is our chance,” managing director Lim Chai Beng told reporters after the company’s annual general meeting (AGM) yesterday.

Lim revealed that the company is currently bidding for 10 oil palm mill projects worth some RM10 million to RM70 million each.

“Most of the projects are overseas, from Indonesia and Papua New Guinea ... and around two to three projects are from local companies,” he told reporters after the AGM yesterday.

“Our succession rate [in securing contracts] is high at around 70%,” he said.

CBIP (fundamental: 2.7; valuation: 1.8) has secured four palm oil mill contracts worth RM250 million since the beginning of the year, according to Lim.

“There will be more contracts in the next two to three months,” he said.

The current outstanding order book for the palm oil engineering division is at RM420 million, which will last for one and a half years.

Meanwhile, its order book for the special purpose vehicles (SPV) division is at RM200 million. Its SPV division focuses on retrofitting SPVs such as firefighting and rescue vehicles and ambulances.

For the financial year ended Dec 31, 2014, the contribution from the palm oil engineering business to its revenue was 70% to 25% while the remaining came from its SPV division.

Meanwhile, CBIP announced that its net profit declined 5.53% to RM22 million or 4.14 sen per share for the first quarter ended March 31, 2015 against RM23.29million or 8.78 sen per share, due to share of losses by the associates and joint ventures (JV).

“The decrease in profit before tax was mainly due to a share of losses by the associates and JV. The associates and JV posted a loss of RM1.7 million compared with a profit of RM2 million for the same period last year,” CBIP said in a filing with the local bourse yesterday.

CBIP’s revenue dropped 2.8% to RM117.65 million from RM121.04 million last year, mainly due to lower project billing by the SPV segment, down 41% compared with the same period last year.

Moving forward, CBIP expected the environment would be challenging.

This article first appeared in The Edge Financial Daily, on May 29, 2015.