This article first appeared in The Edge Financial Daily on March 13, 2018 - March 19, 2018

Econpile Holdings Bhd
(March 12, 97 sen)
Maintain buy with a target price of RM1.20: We are positive on Econpile Holdings Bhd and its recent price weakness makes it an attractive value proposition. Earnings growth remains intact underpinned by a RM1.3 billion outstanding order book.

The company has secured new contracts worth RM441.9 million for this financial year bringing the total order book to over RM1.3 billion, providing earnings visibility for the next three years. Contract replenishment is estimated to be over RM600 million. Econpile’s extensive equipment and fleet of machinery, with the majority fully depreciated, continue to be its key strength as evidenced by its double-digit net margins.

Econpile’s balance sheet remains healthy with gearing at 0.1 times and it has allocated RM30 million to RM40 million as capital expenditure for more machinery. The company has a dividend policy of 20% of net profit but has over the past two years distributed 27.7% and 29.8% respectively. Its net margins of 13% remain higher than its peers’ due to its extensive fleet of machinery, efficiency and superb cost management. — Rakuten Trade Research, March 12