PETALING JAYA (ANN/THE STAR) – CGS International Research reaffirms “add” rating on Econpile Holdings Bhd at MYR0.45, with a target price of MYR0.61, citing anticipated gains from upcoming infrastructure projects and the expanding data centre market.
According to the research house, Econpile is among the few local players capable of completing technically demanding piling jobs.
Recent awards for flood mitigation projects, the Pan Borneo Sabah phase 1B, and the revival of some failed projects in Sarawak highlight its capabilities.
In Sarawak, a shift by the state government aims to involve more local contractors in tenders, reducing reliance on Chinese contractors.
Econpile’s tender book currently stands at MYR1 million, with 90 per cent related to property projects, which offer higher margins compared to infrastructure projects.
“There are also three data centre tenders, each ranging from MYR30 million to MYR60 million. Besides piling works, Econpile can also build the core and shell, but not the mechanical, electrical, and plumbing works,” noted CGSI Research.
Despite the need to replenish its order book, with rig utilisation at 50 per cent, Econpile plans to conserve capacity in anticipation of new projects potentially increasing prices by 15 per cent.
As of March 2024, Econpile’s order book was valued at MYR400 million. The Pavilion Damansara Heights phase two podium works, worth MYR105 million, are nearing completion, with a target date of December 2024.
This project has been a significant drag on gross profit margins, but overall collections have improved significantly in recent months.
However, rising diesel prices have led to concrete price increases of five per cent to seven per cent, which may impact existing projects.
CGSI Research estimates that a one per cent decline in the FY25 gross profit margin could reduce FY25 net profit by 14 per cent.
