SINCE Econpile Holdings Bhd’s debut on Bursa Malaysia in June, it has seen positive newsflows and contract awards. Over the six months, the company has been awarded five contracts worth RM200.9 million, bringing its order book to about RM480 million as at end-September 2014.
Econpile’s order book comprises projects in the property development and infrastructure sectors — mainly in the Klang Valley, Johor and Melaka that are expected to last the group for one to two years.
With its continued tendering for projects amid the booming domestic construction sector, the group believes its order book will grow further.
Currently, Econpile has a tender book of RM1 billion to RM2 billion, mainly in growth areas such as Kuala Lumpur, Johor and Penang.
Econpile has a 13% share of the domestic piling and foundation service market. As at last year, this market had an estimated value of RM3 billion.
Going into 2015, Econpile is positive about its prospects as it expects continued growth in the piling and foundation service segment.
“With a tender book of RM2 billion, management notes that demand for piling jobs remains robust in the medium term, with a number of upcoming construction jobs in the Klang Valley,” says AmResearch in a Dec 4 note.
“On another positive note, Econpile was recently added to the Securities Commission’s shariah-compliant list. The group is a strong beneficiary of rising job flows with its good execution. It also makes a concerted effort to improve margins.”
For its first quarter ended June 30, 2014, Econpile posted a net profit of RM9.5 million on the back of RM106.3 million in revenue. Earnings per share was 1.78 sen. The group also proposed a dividend of one sen per share.
In a filing with Bursa, the group says revenue contribution from piling and foundation services for property development projects continued to dominate, while the remaining earnings came from the infrastructure works segment.
Being one of the leading piling and foundation service providers in Malaysia, the stock draws investors as it is expected to benefit from infrastructure and mega projects.
Among the piling solutions rendered include bored, driven and jack-in, while the foundation services include earth retaining system, earthworks, substructure and basement construction works.
According to RHB Investment Bank, the sole principal adviser, sole underwriter and sole placement agent for Econpile’s listing, the initial public offering (IPO) for the Malaysian public was oversubscribed by 35.4 times, representing total application monies of RM530.7 million.
On its maiden trading day, Econpile’s share price closed at 70.5 sen, which was a 31% premium to its IPO price of 54 sen.
In August, Econpile’s share price hit a high of RM1.15, representing a premium of 113% to its IPO price, notably one of the best performing IPOs in Malaysia this year. The counter closed at 74 sen last Tuesday.
Initially, the group had sought to raise only RM48.6 million from the IPO. However, it raised RM78.3 million, giving Econpile a market capitalisation of RM288.9 million. As at July 21, the group’s market capitalisation rose to RM438.7 million.
To date, Econpile has delivered more than RM2 billion worth of piling and foundation services for infrastructure and property development projects in the Klang Valley, Penang, Johor, Pahang, Sabah and Sarawak.
Econpile’s major projects include the 50-storey Elite Pavilion tower in Jalan Bukit Bintang, KL, and an underground pedestrian crossing linking Pavilion KL and Fahrenheit 88.
The company has also provided piling and foundation services for the Putrajaya government administrative centre and the ongoing Klang Valley Mass Rapid Transit project.
This article first appeared in The Edge Malaysia Weekly, on 22 - 28 December 2014.
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