PETALING JAYA: CGS International Research (CGSI Research) expects Econpile Holdings Bhd
to be a key beneficiary of revival in the government’s infrastructure spending with its capabilities and fleet in bored piles.
The construction company recently bagged a contract worth RM35.1mil for bored piling, earthworks, retaining wall and sub-structure works for a service apartment project in Overseas Union Garden from WCT OUG Development Sdn Bhd.
The project which comprises two 57-storey service apartment blocks is expected to run for 13 months starting Oct 28, 2024, while Econpile expects gross profit margin to be at sub 10% levels.
CGSI Research noted the new contract takes Econpile’s year-to-date and financial year 2025 (FY25) to RM166mil and its orderbook to RM548mil as at September 2024. “Econpile expects new order wins of RM400mil to RM450mil for FY25, matching FY24 levels. Our FY25 new-win forecast is RM450mil,” it said.
The research house added Econpile only has one legacy project in its orderbook, Pavilion Damansara Heights Phase 2, which has dragged down its gross profit margins.
It added the project has an outstanding balance of RM20mil and has a targeted completion date of FY24.
“After many disappointing quarters in the red, we expect earnings to recover in F25 on a gradual basis, with 1Q25 likely to be profitable. Econpile’s tenderbook currently stands at RM1bil, of which 90% are property projects, which have higher margins versus infrastructure,” CGSI Research stated.
It added key risks could include delays in the roll-out of mega projects and higher raw material costs.
Meanwhile, the research house explained that the contract won recently by Econpile signifies WCT Holding’s plan to be more aggressive with its property launches.
For WCT, its first half of 2024 sales stood at RM579mil, while the company seems on track to achieve its FY24 sales target of RM960mil.
“WCT also announced on Oct 16, that it awarded a RM246mil contract in Johor for four service apartment towers with a six-storey podium to Fajarbaru Builder Group Bhd. “We believe this is WCT’s property development project known as WCT Larkinton Phase 2 , with a total gross development value (GDV) of RM586mil,” CSGI Research noted. It reiterated its “add” call on Econpile with an unchanged target price of 56 sen a share.
