This article first appeared in The Edge Financial Daily, on January 6, 2016.

Econpile Holdings Bhd
(Jan 5, RM1.08)
Maintain buy with a target price (TP) of RM1.27: Just a day before the New Year celebration, Econpile Holdings Bhd reported that it had secured a contract from Ahmad Zaki Sdn Bhd to undertake piling and substructure works for a mixed commercial and residential development in Kampung Baru, Kuala Lumpur, worth about RM20.3 million. 

Nonetheless, we are not making any changes to our forecasts, as this latest contract forms part of our financial year 2016 (FY16) order book replenishment of RM350 million. 

We maintain our “buy” rating on Econpile, with an unchanged TP of RM1.27.

Including this contract, Econpile has announced a total of RM236.3 million worth of projects accounting for 67.5% of our new job assumption of RM350 million for FY16. 

Together with this contract, the group’s total balance order book in hand stands at approximately RM600 million, which should provide earnings visibility until 2017.

We are neutral on the contract, as it is already imputed in our FY16 order book replenishment assumption. Hence, there is no change to our earnings estimates.

The works are scheduled to commence this month.

We believe the group is gaining traction in securing more projects this year, as it undoubtedly will benefit from robust construction activities, with the Mass Rapid Transit 2 (MRT 2) and Light Rail Transit Line 3 projects to commence soon. 

The group already has a track record in handling the piling and foundation works for MRT 1. We maintain our TP at RM1.27, based on 13 times price-earnings ratio over FY16 earnings per share, with a “buy” rating on Econpile. — BIMB Research, Jan 5