CB Industrial Product Holding Berhad Equipping Palm Oil Industries Around The World Investor Presentation
Our History and Background History and Background Historical Share Performance Established in 198s and listed on the Main Board of Bursa Malaysia Securities Berhad in 25 Primarily involved in 3 business segments: Palm oil engineering; Special purpose vehicle retrofitting; and Oil palm plantation and milling The first publicly-listed player in the palm oil engineering sector globally Joint-holders of the Modipalm Continuous Sterilization milling system patent together with the Malaysian Palm Oil Board Markets are centralised in Indonesia, Malaysia and the African/Central American region RM 3 2.5 2 1.5 1.5 3 2.5 2 1.5 1.5 Adjusted CBIP Price Adjusted CBIP Price 1 8 6 4 2 Bursa Plantation Index CBIP Shares 6 5 4 3 2 1 Aug 13 Nov 16 RM CAGR: -3.79% CAGR: 13.12% Adjusted CBIP Volume Index Point Aug 13 Nov 16 2
Key Group Financial Highlights (RM million) Revenue 7 6 59 61 5 554 522 4 3 323 2 1 FY11 FY12 FY13 FY14 FY15 (RM million) 16 14 12 1 8 6 4 2 Profit Before Taxation 71 99 126 17 14 FY11 FY12 FY13 FY14 FY15 (RM million) 8 7 6 5 4 3 2 1 381 Shareholders Funds 484 53 599 669 FY11 FY12 FY13 FY14 FY15 (RM million) PATAMI 3 25 2 15 1 24 5 15 98 91 94 FY11 FY12 FY13 FY14 FY15 3
Key Group Financial Highlights RM 25, 2, 15, 1, 5, Low Gearing Ratio.46.5.4.3.5 FY11 FY12 FY13 FY14 FY15 Times.5.45.4.35.3.25.2.15.1.5 Notes: ^ sen 2 15 1 5 9% 17.5 Attractive Dividend Payout 17% 7.5 27% After adjusting for bonus issue of 134,445,974 amd 272,8,473 new ordinary shares º Includes special dividend of 15 sen per share Includes special dividend of 4 sen per share 32% 56% 5 5.5 1 FY11º FY12 FY13 FY14 FY15* Gross Dividend Per Share^ % of PATAMI Payout Ratio 1% 8% 6% 4% 2% % Borrowings Funding flexibility Gross Gearing Ratio Stable dividend policy with a target of approximately 3% PATAMI payout ratio Capability to undertake strategic acquisitions and/or organic expansion Attractive annual reward to shareholders while maintaining growth momentum 4
Latest Quarter Review Third Quarter Results Review Continuing Operations Quarter ended 3 September % change 9 months period ended 3 September % change 216 215 216 215 (RM ) (RM ) (RM ) (RM ) Revenue 14,691 124,13 13.44 391,673 357,278 9.62 Profit from operations 35,566 21,81 63.7 77,355 72,89 7.3 Share of results of associates and 5,51 3,385 62.77 6,599 2,46 168.25 Movement jointly-controlled entity of CBIP mimics the movement of the Bursa Malaysia Plantation Profit before taxation Index, which is largely 4,831 dependent 24,873 upon 64.16 the 83,87 price of 73,617 CPO 12.86 Profit after taxation 32,787 16,127 1.33 61,31 56,36 8.78 Revenue for the quarter and 9 months period ended 3 September 216 increased 13.44% and 9.62% respectively mainly due to higher billing for both the palm oil engineering and special purpose vehicles division Profit after taxation was higher for the quarter and 9 months period ended 3 September 216 mainly due to higher revenue and margin for the special purpose vehicles division offset by lower profit margin from the palm oil engineering division 5
Latest Quarter Review Revenue Breakdown 9 months period ended 3 September 216 9 months period ended 3 September 215 Special Purpose Vehicles 2% Special Purpose Vehicles 17% Palm Oil Engineering 8% Palm Oil Engineering 83% Profit Before Taxation Breakdown Profit Before Taxation 9 months period ended 3 September % change 216 215 (RM ) (RM ) Palm Oil Engineering 64,622 7,112 (7.77) Oil Palm Plantation (3,345) (3,86) (12.11) Special Purpose Vehicles 15,211 4,851 213.56 Share of results of associates and jointly-controlled entity 6,599 2,46 168.25 Total 83,87 73,617 12.86 6
Palm Oil Engineering Services One stop centre turnkey contractor for Modipalm Continuous Sterilization palm oil mills Our services and products encompass the following: Earthwork/site preparation; Civil construction; Mill engineering; and Supply, installation, testing and commissioning of machineries and equipment Palm Oil Engineering Core Products Screw Press Digester Continuous Sterilizer 7
Palm Oil Engineering - Robust Performance 5, 45, 25.67% 26.64% 3.% PBT margin has grown from 17.7% in FY11 to 26.64% for FY15 4, 35, 3, 25, 2, 15, 17.7% 265,57 22.72% 341,379 317,621 2.63% 447,428 428,593 25.% 2.% 15.% 1.% The significant improvement over the years can be mainly attributable to: Proven and exclusive technology in our Modipalm Continuous Sterilization mills; Economies of scale; Declining steel price; and 1, 5, 114,181 77,551 81,535 92,286 45,234 FY11 FY12 FY13 FY14 FY15 5.%.% Improvement in project implementation Revenue PBT PBT Margin 8
Palm Oil Engineering - Robust Performance RM Orderbook growth is underpinned by a backlog of RM493million as at 3Q216 52, 51, 5, 49, 48, 47, 46, 45, 478, Clientele Expansion 517, New Clients 29% 495, Recurring Clients 71% 477, New Clients 7% 493, 3Q215 4Q215 1Q216 2Q216 3Q216 Orderbook 211 214 Despite declining trend in CPO price, product branding and global recognition surrounding our Modipalm Continuous Sterilization palm oil mill have been sustaining our orderbook Recurring Clients 3% There has been an influx of new clients, being clients other than Astra, Wilmar, Felda, TH Plantations, Tradewinds and Sime Darby Notable new clients secured include Jaya Tiasa, TDM, Sime Darby, Sinarmas Group, United Plantations Bumitama Agri, Ahmad Zaki and Rimbunan Hijau 9
Higher Oil Recovery Historical Performance Post Conversion In conventional batch process, oil are loss during extraction process as spillage of oil occurs during mobilization process for the batch processing Our Modipalm mill also eliminates the need for recovery of empty bunch oil, which are low quality oil with high wax content Our Modipalm Continuous Sterilization palm oil mills utilizes a continuous conveyor chamber for sterilization process, as opposed to conventional batch processing Oil Extraction Rate (%) 2.6 2.4 2.2 2 19.8 19.6 19.4 19.2 19 21 2.5 2 19.5 19 18.5 18 17.5 19.47 Before Conversion 18.51 2.27 2.4 Year of Conversion Oil Extraction Rate (%) Before Conversion 18.89 Year of Conversion After Conversion 2.4 After Conversion Mill 1 Mill 2 1
Operator Cost Savings Mill Size Estimated Operator Requirement (No.) Conventional Mills 2 Tonnes/Hour 4 16 3 Tonnes/Hour 45 2 45 Tonnes/Hour 5 24 6 Tonnes/Hour 55 24 Modipalm Continuous Sterilization Mills Operator requirement for the Continuous Sterilization mill is minimal Automation of mill reduces role of operator s to supervision only Performance of mill is not highly dependent on labour performance Estimated Cost Savings for Continuous Sterilizer Mills(RM) 8, 6, 4, 2, Conventional Mills Continuous Sterilization Mills - 2 Tonnes/Hour 3 Tonnes/Hour 45 Tonnes/Hour 6 Tonnes/Hour Savings (Monthly Wage including OT: RM1) Savings (Monthly Wage including OT: RM15) Savings (Monthly Wage including OT: RM2) 11
Maintenance Cost Savings Machineries Conventional Mills Horizontal sterilizers, cages, tractors, skid-steer loaders, railway tracks, cages, transfer carriages, winches, capstans and mono-rail hoists or cage tippers Continuous Sterilization Mills Fresh fruit bunch conditioner and Continuous Sterilizer Approximate Annual Maintenance Cost 7, 6, 5, 4, 3, 2, 1, - Estimated Maintenance Cost For Machineries (RM) 6, 5, 4, 3, 3, 25, 2, 15, 2 Tonnes/Hour 3 Tonnes/Hour 45 Tonnes/Hour 6 Tonnes/Hour Conventional Mills Continuous Sterilizer Mills 12
Total Cost Savings We assume based on the following scenarios: A 45 tonnes per hour conventional mill; Total operator for mill is 5; Average monthly wage including overtime reimbursement is approximately RM1,5.; and Total maintenance cost for the machineries involved in sterilization process is approximately RM5, per annum A 45 tonnes per hour Continuous Sterilization mill; Total operator for mill is 24; Average monthly wage including overtime reimbursement is approximately RM1,5.; and Total maintenance cost for the machineries involved in sterilization process is approximately RM25, per annum Conventional Sterilizer Continuous Sterilizer Savings (RM) Estimated annual labour cost 9, 432, 468, Estimated annual maintenance cost 5, 25, 25, Total (2, MT FFB per annum) 718, Cost Savings (RM/FFB) 3.59 13
Safety Conventional Mills Continuous Sterilization Mills Non-pressurized and relatively safe sterilization process Zero accident track record Oil spillage is close to nonexistent which allows for a clean working environment Eliminates arduous manual tasks and labour requirement is strictly for supervision purposes 14
Quality Environment Deterioration of bleachability index (DOBI), is an analytical procedure intended for quality control of crude palm oil Conventional Mills Indicates the ease of refining and predicts its oxidative status 4. DOBI Performance of Modipalm Continuous Sterilizer Mills Continuous Sterilization Mills 3.5 Excellent 3. Good 2.5 2. 1.5 1. Poor Sludge Oil Fair DOBI Value Smoke emissions from Continuous Sterilization mills are generally cleaner as opposed to intermittent black smokes from conventional mills.5 - Steam consumption for Continuous Sterilization mills are also relatively constant 15
Our Projects In Malaysia (28 Present) 16
Our Projects In Indonesia (28 Present) 17
Our Projects In Central America/Africa (28 Present) 18
Major Customers and Project References Market Breakdown Continuous Sterilisation Country Customer No. of mills Malaysia/Indonesia Felda Group 13 Wilmar 11 Sime Darby 9 TH Plantations 9 Astra Agro Lestari 8 London Sumatra 5 Tradewinds 4 TDM 3 PT Smart 2 Bumitama 2 Others 2 Country/Region Indonesia 45% Malaysia 4% Central America/Africa Market breakdown 15% Subtotal 86 Thailand, Papua New Guinea, Africa and Central America 16 Total Modipalm continuous sterilisation mills 12 Total conventional mills 41 Grand total 143 19
Special Purpose Vehicles Special Purpose Vehicles 3, 25, 2, 15, 1, 5, RM 2.91% 15.7% 13.7% 262,54 41,139 152,423 123,363 2,885 25,797 FY13 FY14 FY15 25.% 2.% 15.% 1.% 5.%.% A 51% owned subsidiary, our special purpose vehicles division has grown from contributing RM57 million in revenue in 211 to more than RM262 million in 213 and RM152 million in 214 Focused primarily in bulky supply of specialised vehicles for government authorities and agencies Revenue PBT PBT Margin RM 6, 5, 4, 3, 2, 1, 53, 217, 9, 35, 35, 3Q2154Q2151Q216 2Q2163Q216 Orderbook Orderbook for the special purpose vehicles as at 3Q216 is RM53 million 2
Special Purpose Vehicles Special Purpose Vehicles The special purpose vehicles division is gradually expanding its products portfolio, with products ranging from helicopters, machine gun stabilizers and military related vehicles Successfully secured a contract to supply 2 units of AW189 helicopters for a total contract amount of RM21 million as at 1Q216 21
Plantation and Milling Oil Palm Cultivation Mature Plantation Assets Kumpulan Kris Jati Land area: 16,567 ha Planted: 11,492 ha Solar Green Land area: 5,567 ha Planted: 4,638 ha Bahtera Bahagia Land area: 4,269 ha Planted: 4,214 ha Effective Group Interest Breakdown Jointlycontrolled entity/ Associate Solar Green Sdn Bhd Kumpulan Kris Jati Sdn Bhd Effective Total planted area Effective equity interest group planted area (ha) (%) (ha) 4,638 5. 2,319 11,492 3. 3,448 Sarawak Bahtera Bahagia Sdn Bhd 4,214 3. 1,264 Total 2,344 7,31 22
Plantation and Milling Oil Palm Cultivation Immature Plantation Assets We have a greenfield landbank of approximately 86, hectares, mostly situated in Kalimantan Tengah, Indonesia, of which 8,877 hectares has been planted as at 3Q 16 Future planting to be targeted at approximately 2, hectares per year 23
Further Information Registered Office CB Industrial Product Holding Berhad Lot 4, Jalan Waja 15 Kawasan Perusahaan Telok Panglima Garang 425 Telok Panglim Garang Selangor Darul Ehsan Registered Office Telephone No.: 3 3122 2786 Facsimile No.: 3 2122 1336 E-mail: info@cbip.com.my Website: www.cbip.com.my Contact Person Lim Zee Yang Investor Relations & Corporate Affairs CB Industrial Product Holding Berhad Telephone No.: 3 3122 2823 Cellphone No.: 12 633451 Facsimile No.: 3 2122 1336 E-mail: zeeyang@cbip.com.my Disclaimer Certain statements in this presentation are based on historical results which may not be reflective of future results. Other statements, including without limitation, those regarding our future prospects, strategies and objectives of our Group, which are forward-looking in nature, are subject to uncertainties and contingencies. Although we believe that the expectations reflected in such forward-looking statements are reasonable at this time, there can be no assurance that such expectations will subsequently materialise. The inclusion in this presentation should not be regarded as a representation or warranty by our Group or our management team that the plans and objectives of our Group will be achieved. 24