PETALING JAYA: Econpile Holdings Bhd
is well-placed to clinch a larger piling package exceeding RM50mil from the Penang Light Rail Transit (LRT) project heading into the piling specialist’s financial year ending June 30, 2026 (FY26), says CIMB Research.
The research house said that the piling work is located next to the group’s ongoing piling-related work under Package CMC1 (East Jelutong to Gelugor).
The research house pointed out that beyond the Penang LRT, there are no major infrastructure prospect bids within the group’s RM1bil active tender book.
However, it said this could quickly change with the progressive rollout of cornerstone projects under the 13th Malaysia Plan (13MP) from next year onwards.
“Underscoring its renewed job bids, the group has projected a higher capital expenditure budget of RM10mil for FY26, compared with RM1.2mil in FY25. With the deployment of manpower and resources for the Penang LRT project, Econpile’s current fleet and machinery utilisation stands at about 60%,” CIMB Research added.
The research house maintained a “buy” call on the stock with a higher target price of 48 sen from 38 sen, pegging the stock at an unchanged price-earnings multiple of 19 times.
This is backed by new contract wins worth RM400mil for FY26, rising to RM550mil and RM650mil for FY27 and FY28, respectively.
The research house highlighted that total new contract wins year-to-date for FY26 had already reached RM160mil following the winning of a RM24mil piling contract in Puchong in August from Matrix Concepts Holdings Bhd.
The research house said the new job also lifted the group’s order book by about 5% to RM523mil from RM498mil as of June 30.
“Alongside greater order book visibility, we expect Econpile to resume dividend payments in FY26 – its first since FY19 – with net gearing improving to 15.1% as of June 30, compared with 18.4% in FY24,” it said.
Similarly, RHB Research kept its “buy” call with a higher target priceof 52 sen from 48 sen.
“We remain positive on Econpile’s track record in infrastructure jobs versus other piling contractors, in addition to its undemanding valuation, with its FY26 price to book value at 1.4 times versus the Bursa Malaysia Construction Index’s 1.6 times.
“While our FY26 to FY28 earnings forecasts reflect growth versus the core losses incurred during FY22 to FY24, our projections have yet to match levels seen in FY18, when core earnings were at RM87mil.
“This warrants the continued adoption of the price to book value valuation method,” the research house added.
It sees the company as a beneficiary of upcoming infrastructure projects, given its solid track record in railway and highway-related projects.
RHB Research raised its FY26 to FY27 bottomline forecasts for Econpile by 14% and 3% by imputing higher margin assumptions, as earnings exceed estimates.
It also introduced its FY28 earnings forecast, which includes a RM500mil job replenishment assumption.
