The group said in an analysts' briefing that public projects continue to be held back by various administrative challenges and restrictions due to the pandemic.
"Over the immediate term, Econpile will continue to eye mainly smallish piling/substructure jobs (under RM50mil in terms of size) from private property projects locally (we believe the likes of the Tunku Abdul Rahman University College piling job secured recently)," said AmInvestment Bank Research, citing Econpile.
Thus far in FY22, Econpile has only secured a smallish RM22.7mil piling job for a new seven-storey building at Tunku Abdul Rahman University College in Setapak, boosting its outstanding order book to RM853mil.
The lower replenishment target is in line with AmInvestment Bank Research's cautious outlook on the construction sector.
"In the newly unveiled 12th Malaysia Plan, development expenditure in 2021–2025 is projected at RM400bil versus RM248.5bil spent under the 11th Malaysia Plan (2016–2020).
"However, the spending is likely to be backloaded, i.e. with higher allocation only from 2023 when Covid-19 related spending begins to taper," said the brokerage.
It also noted other macro and operational challenges including high national debt, operating/commercial risks, intensifying competition and higher operating cost, lower efficiency and supply chain disruptions amid the pandemic.
Econpile expects any meaningful improvement in margins to come from higher productivity, which should be boosted by an 85%-vaccinated workforce and stable input costs over the immediate term.
Meanwhile, the group's largest-ever overseas job valued at US$85.7mil (RM347.6mil) and substructure work subcontract for the Naga 3 project backed by MCC International Incorporation Ltd in Phnom Penh, Cambodia, has started contributing since 4QFY21 ended June 30, 2021.
"From the initial billings of about US$2mil/month in 4QFY21, the amount has risen to about US$3mil/month since Sept 2021.
"With its expanding network and knowledge in the local supply chain and market, Econpile is ready to take on more piling jobs in Cambodia," said AmInvestment.
AmInvestment has an "underweight" rating on Econpile as it believes valuations are rich at 13-16 times forward earnings, given the muted earnings growth prospects.
Its fair value remains at 21 sen per share based on nine times fully diluted FY22 forecast earnings per share.