KUALA LUMPUR (Aug 10): RHB Research expects Econpile Holdings Bhd’s (KL:ECONBHD) core net profit for the fourth quarter ended June 30, 2026 (4QFY2026) to come in significantly lower than a year ago due to higher prices of materials.

The house expects the construction engineering firm’s core earnings for the three months to be between RM200,000 and RM500,000 compared with 4QFY2025’s core earnings of RM8 million.

"Taking this into account, we project its FY2026 core earnings at RM3.7 (million) to RM4 million," said the house in a note on Monday.

The research house attributed the lower profits to higher prices of materials like diesel, with the Brent crude oil price reaching as high as US$118 per barrel in late April.

The expectations of lower earnings is also in line with the performance of industry peers, particularly Aneka Jaringan Holdings Bhd (KL:ANEKA).

RHB noted that Aneka’s overall revenue in 3QFY2026 surged by 38% year-on-year (y-o-y), with its gross profit margin (GPM) having dropped to 4.9% from 10.5% a year ago, on the continued escalation in material, fuel and transportation costs.

“Based on this peer’s performance, GPM (gross profit margin) compression in Econpile’s upcoming 4QFY2026 results would be highly likely,” the house said in the note.

According to the report, Econpile’s latest outstanding orderbook is expected to be at approximately RM570 million after taking into account the latest RM39.5 million job win for a commercial development in July.

Further, the group’s new job wins for 2026 stood at approximately RM404 million, which was slightly above its job target of RM400 million for the same period, while the group’s tenderbook is valued at around RM1 billion, comprising private and public sector jobs.

RHB believes that new contract wins and bids are likely to be priced at better margins compared to ones secured prior to the period of diesel cost spikes, which were driven by the Middle East conflict.

However, this could be offset by prolonged high material costs, and a slower-than-expected roll-out of mega infrastructure projects.

Due to lingering concerns that may continue to pressure oil prices, the house cut Econpile’s FY2026-FY2028 earnings by 12%, 14% and 10%, while trimming their target price to 23 sen, down from 27 sen.

“Nonetheless, Econpile’s leading track record in infrastructure jobs such as Light Rail Transit 3, Mass Rapid Transit 2, and Penang Light Rail Transit may enable the group to secure other infrastructure projects such as the Johor Bahru Autonomous Rapid Transit.”