PETALING JAYA: Mounting cost pressures, largely from the doubling of diesel prices and 10% increase in concrete prices since the US-Iran conflict began, will weigh on margins of Econpile Holdings Bhd
.
The group is in negotiations in terms of cost sharing and, in the worst-case scenario where material supply becomes an issue, may exercise the force majeure clause, said CGS International (CGSI) Research.
For now, it is not seeing any strain in its cash flow and payments from customers – largely tier 1 developers – have remained prompt.
While diesel accounts for 3% of total cost of goods sold for Econpile, elevated oil prices will still be a drag given the relatively thin – about 9% to 10% – gross profit margins for its RM659mil order book as at end December 2025.
CGSI Research noted that Econpile’s balance sheet is strong, with a net gearing of just 0.09 times as at end-December 2025 and robust operating cash flows. As such, the research firm believes Econpile should weather this high-cost environment better than its competitors.
CGSI Research cut its financial year 2026 (FY26), FY27, and FY28 earnings per share by 40%, 58%, and 46%, respectively, to factor in lower gross profit margins of 8%, 9%, and 11% (from 9%, 12%, and 14% previously).
The research house also revised its FY27 new order wins to RM450mil versus RM600mil.
CGSI Research believes the stock is grossly oversold, trading at all-time lows and just 0.4 times FY26 price to book value, the lowest end of its trading range since FY22.
The research house kept its “add” call and cut the target price to 24 sen a share, still based on a 24 times 2027 price to earnings ratio.
Year-to-date 2026 new wins amounted to RM337mil, representing 84% of its FY26 target of RM400mil.
