5 days ago
- Business
- New Straits Times
Re-rating for Econpile on Klang Link boost, meets 2025 target
KUALA LUMPUR: RHB Investment Bank Bhd (RHB Research) sees potential rerating catalysts for Econpile Holdings Bhd, driven by the prospect of faster-than-expected approval for the Sungai Klang Link project, which could contribute RM300 million to RM500 million worth of piling work.
In a research note, the firm highlighted that Econpile's year-to-date (YTD) contract wins for the financial year ending 2025 (FY 2025) have already reached RM300 million, meeting RHB's full-year target ahead of time.
Its latest contract marks the eighth award for FY 2025, which is a RM42.8 million subcontract from Irama Duta Sdn Bhd to carry out bored piling works for the Penang Light Rail Transit (LRT) project, covering the stretch from East Jelutong to Gelugor. Work is expected to commence in August 2025 and conclude by October 2027.
With this award, Econpile's outstanding order book has grown to about RM480 million. This includes jobs for condominium piling, bridge works, and mixed-use commercial developments.
Meanwhile, the company's tender book is valued at around RM1 billion, comprising opportunities from both public and private sectors.
RHB Research estimates the gross profit margin for the new LRT job to range between 5 per cent and 8 per cent.
Notably, prior to securing this subcontract, Econpile had already been involved in test piling for segment 1 of the Penang LRT.
"Based on our observation, the stretch between the East Jelutong and Gelugor stations is around 5km against the full estimated 24km length of segment 1 of the Penang LRT.
"This suggests there could be five piling packages in total, assuming each package covers about 5km. Hence, we do not discount the possibility of more piling awards taking place in the future," it added.
Following the new contract, RHB Research kept its earnings estimate, as the amount is within its FY 2025 job replenishment target.
The firm maintained its "buy" call on Econpile with an unchanged target price of 42 sen a share, derived by pegging forecast earnings per share for FY 2026 to a target price-to-book value (P/BV) multiple of 1.9 times.
"While our FY 2026-2027 earnings reflect growth versus the core losses incurred during FY 2022-2024, our projections have yet to match the levels seen in FY 2018, when core earnings were at RM87 million. This warrants us continuing to use P/BV to value the stock," it said.
