PETALING JAYA: Econpile Holdings Bhd
is expected to face a challenging fourth quarter, as rising input costs stemming from the Middle East conflict increasingly weigh on margins.
However, the piling specialist’s strengthening balance sheet and healthy cashflow may position it better to navigate the higher cost environment, said analysts.
BIMB Research said Econpile’s fourth quarter for the financial year ending June 30, 2026 (4Q26) could potentially turn loss-making, as management guided that 4Q26 may see full-quarter impact of diesel cost inflation driven by the US-Iran conflict.
The company’s outstanding order book stood at RM576mil as at March 2026, with approximately RM1.5bil in active tenders comprising infrastructure and industrial- related projects.
However, the research house said near-term earnings visibility remains clouded by elevated diesel and concrete prices due to geopolitical tensions.
“While we believe the margin pressure is transitional, meaningful recovery likely depends on successful contract repricing and further improvement in project mix,” it said.
BIMB Research further highlighted Econpile’s improving balance sheet, with cash balances in 3Q26 at RM39.8mil and net gearing now at approximately 0.08 times.
According to the research house, Econpile’s financial position has strengthened and provides sufficient tendering flexibility, moving forward.
Meanwhile, CIMB Research warned that the company may face further margin compression in the second half of 2026.
It pointed out that higher oil prices may have knock-on impacts on key inputs such as ready-mix concrete, the price of which has jumped about 10% since the US-Iran conflict’s onset.
CIMB Research noted that Econpile has discussed with clients to explore cost-sharing adjustments and repricing ongoing bids to factor in the higher costs and mitigate pressures.
The research house downgraded its call on the stock to a “hold” with a lower target price of RM0.16 after cutting the FY26, FY27, and FY28 forecasts by 13%, 49%, and 60% respectively to reflect mounting cost pressures.
RHB Research also cut its FY26 to FY28 earnings estimates by 14%, 10%, and 3% respectively, after revising its order book burn rate to better align with Econpile’s execution pace.
It said that given the 50.6% month-on-month bitumen price surge in March, key highway projects such as the Sungai Klang Link could likely be delayed into 2027.
The research house added that upcoming industrial developments in the Johor-Singapore Special Economic Zone and public infrastructure projects could present opportunities for the company.
RHB Research maintained its “buy” call with a trimmed target price of RM0.27 from RM0.29 previously.
