PETALING JAYA: Foundation construction specialist Econpile Holdings Bhd
reports its fourth quarter ended June 30, 2026 (4Q26) and full-year earnings that have largely beat expectations and may see better margins for new contracts.
However, CIMB Research, which has kept a “hold” call on the stock, has lowered the target price (TP) to 14 sen from 16 sen after cutting financial year 2027 (FY27) and FY28 core net profit forecasts by 8% and 12%, respectively.
The research house, while acknowledging 4Q26 and FY26 earnings beat forecasts, said the reduction in the estimates for FY27 and FY28 reflects a more modest pace of net margin recovery for both years of 2.7% to 3.2% (versus 2.1% in FY26) as the company’s tax rates normalise.
“Econpile is budgeting for an average capital expenditure of RM10mil with no major equipment/fleet replenishment plans in the near-term.
“Backed by positive operating cash flow generation of RM13mil to RM42mil over FY24 to FY26, we project Econpile’s net gearing ratio to remain largely unchanged year-on-year at 8% for FY27,” it said.
“Heading into FY27, we believe that the operating outlook for Econpile remains challenging amid the continued dearth of big-ticket jobs. This is compounded by increased volatility in diesel prices, although concrete prices have softened a little of late,” it said.
The company, which has an order book of RM526mil as at end of 4Q26 versus RM498mil a year ago, targets RM450mil for FY27 order book replenishment from RM406mil won in FY26. Its tender book stands at RM1.5bil.
RHB Research has kept a “buy” recommendation on the stock with an unchanged TP of 23 sen. It has revised up FY27 and FY28 earnings by 9% and 4% respectively after tweaking for unrecognised tax credits along with higher revenue.
“We also introduce FY29 earnings which pencils in a job win target of RM400mil.”
“Looking ahead, new contract wins and bids are likely to be priced at better margins (as it factors in current material price trends) compared to ones secured prior to the period of spikes in the diesel costs driven by the Middle East conflict.
“We also understand that certain projects (namely infrastructure ones) have the main contractor being the one procuring certain materials like concrete which may help alleviate the cost pressures,” it said.
BIMB Research has maintained a “buy” call on the stock with an unchanged TP of 16 sen.
“We remain positive on Econpile’s strengthening balance sheet, improving project execution and potential for further contract replenishment,” it said, noting that while earnings quality and elevated aged receivables remain key risks, low gearing and improving operating momentum provide sufficient valuation support at current levels.
