Econpile climbs to near three-year high as analysts expect more contract wins

• On Thursday, Econpile announced that it had been awarded earthworks contract worth RM83 million from BRDB Developments Sdn Bhd.

KUALA LUMPUR (March 15): Econpile Holdings Bhd climbed to its highest in nearly three years on Friday as analysts urge investors to buy more of the piling company’s stock following its latest contract win.

The counter rose as much as 8.2% to a high of 46 sen during the morning session, its highest since June 2021. Econpile pared its gains to 4.6% to 45.5 sen as of 9.46am after some 16.02 million shares changed hands on Bursa Malaysia. At least one analyst upgraded the stock to "buy".

Econpile won its sixth contract for the financial year ending June 30, 2024 (FY2024) which indicates “positive momentum” in job replenishment, said RHB Investment Bank which upgraded the stock to "Buy" from "Sell" with a higher target price of 51 sen.

“Leveraging on the anticipated upturn in the construction sector, we expect Econpile to secure more projects, given its prominent position in Malaysia not just in property but also railway projects,” the research house said.

Further, margins could also improve from FY2025 onwards on “less volatile material prices and diminishing residual cost pressures from private property development projects secured between FY2020-FY2022 as they near completion,” RHB added.

On Thursday, Econpile announced that it had been awarded earthworks contract worth RM83 million from BRDB Developments Sdn Bhd. The project, to be completed within 18 months, is for the proposed development of 146 units of villa residences, including common facilities and club house in Taman Duta, Bukit Tunku, Kuala Lumpur.

Two analysts rated the stock with "buy", two assigned a "hold" call, while one rated "sell". The 12-month median target price stood at 41 sen, Bloomberg data showed.

For CGS International, there is “high probability” that Econpile’s total new order win could exceed its forecast of RM400 million after the company secured RM392 million worth of jobs so far this year.

“We think the market underestimates the benefits of operating in a less crowded piling market and potential margin expansion from higher-margin jobs, as low-margin projects complete,” said CGS which has Econpile on "Add", equivalent to "Buy" call, with target price of 61 sen.

The demand for piling contractors is expected to outstrip capacity supply in the domestic market, CGS added and projects Econpile to achieve a gross profit margin of 10% for FY2025 and 15% for FY2026.

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