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Monday, March 12, 2018

Econpile Holdings Bhd - Piling up the profits

Author: roundhedge | Publish date: Mon, 12 Mar 2018, 10:38 AM

We are positive on Econpile Holdings Bhd ("Econpile") and their recent price weakness makes it an attractive value proposition. Earnings growth remains intact underpin by RM1.3bn outstanding orderbook. BUY with target price of RM1.20 based on 16x PER FY19 as per its closest related peers.

Econpile has been in the business for over 30 years with unparalleled expertise in piling and foundation involving in many of the high-rise buildings and infrastructure developments in Malaysia.

Econpile has secured new contracts worth RM441.9m for this financial year bringing total orderbookto over RM1.3bn providing earnings visibility for the next 3 years. Contract replenishment is estimated to be over RM600m. Econpile's extensive equipment & fleet of machineries, with majority fully depreciated continues to be their key strength as evidenced by their double-digit net margins.

Econpile's balance sheet remains healthy with gearing at 0.1x and has allocated RM30-40m as capex for more machineries. The company has a dividend policy of 20% of net profit but has over the past 2 years distributed 27.7% and 29.8% respectively. Econpile net margins of 13% remains higher than its peers due to their extensive fleet of machineries efficiency and superb cost management

Source: Rakuten Research - 12 Mar 2018

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