Saturday January 22, 2005 - CB Industrial Product Holding Bhd (CBIP) plansto start operating palm oil mills by next year in a move to expand itscore business of manufacturing such mills for its customers, said managingdirector Lim Chai Beng.
"One of our clients has offered us an opportunity to operate the company’smill and since it’s within our business, we are considering theinvestment," Lim told StarBiz in an interview.
The company is in negotiations with some plantation owners in Indonesiaand Malaysia on possible joint ventures.
CBIP specialises in building modular palm oil mills called Modipalm, whichare scalable and have processing capacities ranging from five tonnes to 45tonnes an hour. They can be operational within four months at lowercapital investment costs, which would reduce the operating costs ofplantation owners.
"Modipalm’s operational cost is lower compared with the smallerconventional mills. In addition, Modipalms are easier to manage if you arefamiliar with the process," he said, adding that the company had receivedpositive response from potential customers and existing customers for themills.
CBIP also plans promote the use of its modular plants to conventionalmills next year. Plantation owners will have the option to operate theModipalm module at the front-end of their conventional plant.
"We have already started discussions (with one interested client) but wecouldn’t take on the job this year because we are quite busy at themoment. We expect to convert the first plant by next year," Lim said.
Lim Chai BengHe said conversion of the plant would be a more cost-effective optioncompared with building a new Modipalm.
"We are targeting the local market as many existing mills have been aroundfor more than 60 years and are due for upgrade. Some plantation owners mayhave to construct new plants," Lim said, adding that initial talks hadbegun with several interested parties.
CBIP has invested RM10mil to develop the Modipalm technology, and it plansto put in an additional RM1mil over the next three to four years to buildsupport facilities.
"We have the engineering skills, financial resources as well as facilitiesto refine our Modipalm to meet the industry standard," he said.
Going forward, CBIP expects its overseas business, particularly inIndonesia, to continue to drive earnings. Its potential markets includethe Philippines, China, Central America and Africa.
"Based on our track record, we have been having double-digit growth everyyear and we expect to maintain this.
"Indonesia has been aggressively developing its plantations in the pastone year. In two to three years, they would need a lot of millingfacilities," Lim said.
He said CBIP was likely to secure 15 new orders this year, 60% of whichwould be from Indonesia. This will sustain its earnings for the next threeyears.
The company currently has an order book of RM150mil, which will last itthrough 2005.
Last year, it constructed 20 Modipalms, of which 13 have been deliveredwhile the balance would be handed over within the next four months.
CBIP posted a net profit of RM15.18mil on sales of RM149.09mil in 2003.For the first nine months ended Sept 30, 2004, net profit and sales stoodat RM10.98mil and RM136.17mil respectively.
It has proposed a transfer of listing from Bursa Malaysia's second boardto the main board by the second quarter this year.