PETALING JAYA: Econpile Holdings Bhd
is expected to face margin pressure from input costs, prompting RHB Research to cut its earnings forecasts for the piling contractor.
The research house expects the pressure to be evident in the fourth quarter ended June 30, 2026 (4Q26), with core net profit estimated at between RM200,000 and RM500,000, sharply lower than RM8mil a year earlier.
“This may be mainly due to the higher prices of materials like diesel, with the Brent crude oil price reaching as high as US$118 per barrel in late April,” it noted.
RHB Research has lowered its FY26 to FY28 earnings forecasts by 12%, 14% and 10%, respectively.
It now expects Econpile’s FY26 core earnings to come in at between RM3.7mil and RM4mil, compared with its previous estimate of close to RM5mil.
As a result, RHB Research trimmed its target price (TP) to 23 sen from 27 sen, based on a lower TP-to-book value (P/BV) multiple of 0.9 times from 1.2 times, pegged to its FY27 book value per share.
Despite the lower TP, the research house maintained its “buy” call on the stock.
“The lower target P/BV is at 0.5 standard deviation lower from the stock’s 10-year P/BV mean – which we view is justified, amidst lingering concerns that may continue to pressure oil prices (and eventually diesel prices),” it noted.
“Nonetheless, Econpile’s track record in infrastructure jobs such as Light Rail Transit 3, Mass Rapid Transit 2, and Penang Light Rail Transit may enable the group to secure other infrastructure projects such as the Johor Baru Autonomous Rapid Transit System.”
The margin pressure is not unique to Econpile.
RHB Research pointed to peer Aneka Jaringan Bhd, whose gross profit margin fell to 4.9% in its 3Q26, from 10.5% a year earlier, amid higher material, fuel and transportation costs.
RHB Research said margin compression in Econpile’s upcoming 4Q26 results is highly likely, with its gross profit margin having stood at 18.6% in 4Q25.
RHB Research said Econpile’s outstanding order book stood at about RM570mil, after taking into account a RM39.5mil commercial development job secured in July, compared with RM498mil at end-FY25.
The research firm said Econpile secured about RM404mil new job wins in FY26, slightly above its target of RM400mil, mainly comprising piling works for condominium and industrial projects.
