KUCHING: Econpile Holdings Bhd’s (Econpile) prospects remains robust supported by a strong tender book of approximately RM1 billion.
AmResearch Sdn Bhd (AmResearch) in a report yesterday said demand for pilling jobs in the Klang Valley and other markets continue to be resilient.
The research firm observed that since the company’s listing in June 2014, Econpile has continued to perform well with new contracts award as well as steady earnings growth on the back of net profit margin expansion.
AmResearch noted that Econpile’s net profit margin has continued to expand from 6.5 per cent in the fourth quarter of financial year 2014 (4QFY14) ended June 2014 to 11 per cent in 4QFY15 ended June 2015.
The research firm believed that Econpile’s net profit margin is expected to improve further as the company recognised contribution from more property-related jobs which could potentially yield higher profit margin than infrastructure jobs.
Nonetheless, AmResearch is conservative on its potential new job award in financial year 2016 (FY16) ended June 2016, forecasting the company to secure about RM320 million worth of new contracts.
Despite that, the research firm expects Econpile’s earnings growth to be sustained, potentially growing by 19 per cent year-on-year (y-o-y) on improved profit margin.
AmResearch projected Econpile’s net profit margin to grow by 11 per cent in FY16 against 10 per cent in FY15.
Meanwhile, Econpile told Bursa Malaysia on June 17 that it has secured a job worth RM49.9 million from Ahmad Zaki Sdn Bhd.
The company added the job involved substructure and basement works for a proposed hotel-cum-office development project in Jalan Sultan Ismail, Kuala Lumpur.
Econpile revealed the duration of the contract is 15 months with expected completion in September 2016.
With the latest job win, AmResearch observed that Econpile has secured RM490.3 million worth of new jobs in FY15.
It noted that the new jobs secured by Econpile in FY15 has exceeded its earlier expectation of RM420 million.
AmResearch foresees the contribution from the latest job and the job for Section 13, Petaling Jaya that Econpile secured last May to contribute towards the company’s financial performance in FY16 onwards.
At this junctutre, the research firm also estimated Econpile’s outstanding orderbook stood at RM510 million.
With a steady outstanding orderbook and the possibility of rising job flows from a promising tender book in the near future, AmResearch maintained a ‘buy’ recommendation on Econpile with a fair value of RM1.50 per share.