EVERYONE knows that palm oil companies are in for an extremely profitable year although on the whole they are subject to price fluctuations.
In the heart of this industry are related companies whose business is more defensive in nature. CB Industrial Product Holding Bhd (CBIP), a key niche player in the engineering and processing segment, is able to ride the fluctuations simply because fresh fruit bunches (FFB) have to be processed.
CBIP manufactures and supplies about 90% of the components of the palm oil mill. It also undertakes feasibility studies, designs, procurement, project management and turnkey construction of the mills.
One of its research products, which has been commercialised, is the mini modular mill equipped with a patented product known as the continuous sterilisation pro- cess. Sterilisation is a critical process in the extraction of high-quality crude palm oil.
Until the breakthrough by CBIP, a continuous sterilisation process had eluded the industry despite intensive research and development over the past five decades, its managing director Lim Chai Beng told StarBiz.
Developed jointly with the Malaysian Palm Oil Board, the continuous sterilisation process won a silver medal from Geneva-based Salon International Des Inventions and gold medal from the Malaysian Invention and Design Society.
With this breakthrough in the process, the company can now produce modular mills, where sterilisation equipment takes up a smaller space of about 20%.
In terms of processing capacity, CBIP's mini modular mills can process FFBs from 5, 10, 15, 20 or 40 tonnes per hour. The price of the mini modular mills ranges from RM3mil to RM20mil.
One of the target customer groups are the owners of young oil palm plantations where investment in a smaller mill is justifiable.
This mill can be used by owners whose plantations are in re- mote areas where there are no mills nearby or it is too costly to send the FFBs to the nearest available mill, Lim explained, adding that the mills produced by CBIP could service plantations between 2,000 and 15,000 acres.
CBIP now has seven mini modular plants in operations, one each in Sabah and Sarawak, four in Indonesia and one in central America.
We are also in the midst of meeting another order from a client in west Africa and we expect the mill to be running in another six months, Lim said.
To accommodate a situation where there is lack of suitable terrain for construction of a mill, the company has come up with a floating mini-modular in a canal in Riau, Indonesia.
Analysts from AmResearch and GK Goh Research Sdn Bhd like CBIP for its potential in Malaysia as well as overseas markets.
In Malaysia, there were many palm oil mills that required refurbishment or replacement of parts, AmResearch said.
New players in the market include some timber companies which are now encouraged by the government to clear some of their forest land for palm oil plantation.
These companies may decide to build some oil palm mills on their land at a later stage, said the AmResearch analyst.
GK Goh Research, meanwhile, said the recent upturn in CPO price had improved cashflows for plantation companies, thus spurring the expansion of new estates and enabling palm oil companies to construct new mills for their young estates.
The analyst from AmResearch said the main concern was the long-term viability of CBIP's new innovations and its ability to prove to some of the larger Malaysian palm oil players like IOI Corp Bhd and Kuala Lumpur Kepong Bhd that its innovations were more efficient and innovative.
To this, Lim said, CBIP was not resting on its laurels.
Our research and development team is working towards increasing the processing capacity of our mills.
Before the next innovation ma- terialises and takes the company to its next quantum leap, CBIP's current order book of RM200mil should keep the group busy for the next two to three years.