This article first appeared in The Edge Financial Daily, on October 12, 2015.

Econpile Holdings Bhd
(Oct 9, 90 sen)
Maintain buy with an unchanged fair value of RM1.50: Econpile Holdings Bhd announced on Bursa Malaysia last Thursday that its wholly-owned subsidiary, Econpile (M) Sdn Bhd (EMSB), was served a notice of arbitration from IRDK Ventures Sdn Bhd.

This pertains to a piling job worth RM8.7 million in Puchong, Selangor, that IRDK awarded to EMSB a year ago.

Note that on June 3, IRDK served on EMSB a notice to determine the contract. EMSB has disputed the alleged determination.

On June 5, EMSB served a notice of adjudication to IRDK to refer the disputes arising from EMSB’s payment claim for the contract.

The claims amount to about RM4 million, as well as interest costs and other reliefs that the adjudicator may deem fit.

The adjudication submission was made and is pending a decision.

On Sept 28, IRDK submitted a notice of demand upon EMSB demanding a sum of RM796,500 being “alleged liquidated and ascertained damages” and a further sum of about RM119 million being “alleged losses of profit due to non-performance of the contract”.

Following this, the notice of arbitration was served last Wednesday.

Econpile is currently in discussions with its solicitors and will proceed with the arbitration process.

We understand that the arbitration process may take three months. We do not expect any material impact from this as we are hopeful that the decision will be favourable to EMSB.

Furthermore, EMSB had already made the necessary impairment for doubtful debts amounting to RM4 million for the financial year ended June 30, 2015. — AmResearch, Oct 9