KUCHING: Recently-listed Econpile Holdings Bhd (Econpile) announced a net produt of RM31 million for the financial year 2014 (FY14), a sign of the group’s strong position to benefit from rising jobs flow.
AmResearch Sdn Bhd (AmResearch) in a report yesterday observed that its net profit was an 11 per cent rise from RM28 million last year, which was in line with its expectations.
This was on the back of an eight per cent topline growth to RM419 million from RM386 million the previous year, whereby about 69 per cent of the revenue came from property development projects.
“Sequentially, revenue for fourth quarter for FY14 (4QFY14) grew by 14 per cent to RM99 million due to higher contributions from property development projects compared to infrastructure ones,” AmResearch estimated.
“Earnings, similarly, grew by 16 per cent.
“Econpile’s earnings before interest, tax, depreciation and amortisation (EBITDA) margin improved one percentage point year on year (y-o-y) to 14.6 per cent. Excluding a one-off cost recognition of RM3.7 million for its employees benefit plan, core net profit margin improved by about one percentage point to 8.3 per cent.”
On the group’s lack of dividend for FY14, AmResearch believed the group will reward shareholders moving forward as it has adopted a policy to pay out at least 20 per cent of profit after tax (PAT).
“We expect net margins to improve by one or two ppts per annum as it improves its product mix. The group is looking to secure more building jobs (instead of infrastructure jobs) that yield better margins.
“This is on the back of its outstanding order book of RM600 million, out of which only eight per cent are infrastructure-related jobs.
“Notably, the group is scheduled to complete the Klang Valley Mass Rapid Transit jobs by October. This will free up 10 to 12 machineries for new building jobs.
“We are forecasting an order book replenishment of RM320 million per annum for FY15F and FY16F. It currently has a tender book of RM2 billion.”
Recall that the group has secured three building contracts worth a total of RM136 million since its listing on June 30. AmResearch expects more jobs to flow through.
“The group is in a net cash position as part of the initial public offering proceeds has been utilised to repay bank borrowings. Capital expenditure will be minimal at around RM10 million per annum.”