Econpile trends higher on expected turnaround

Econpile Holdings Bhd is probably not high on investors’ list given it is still loss-making.

However, despite not being profitable for two consecutive financial years, the counter has seen its share price more than doubled in the past year.

It surged 131% to close at 48 sen on May 8, having plunged to a year low of 16 sen in June last year.

The counter hit a 52-week high of 54 sen in March and has since lost some ground.

Nevertheless, an upward trajectory is likely to resume for Econpile.

The counter’s immediate resistance target is at 53 sen before challenging the next resistance threshold of 58 sen.

The bullish sentiments could stem from anticipation that the company will witness earnings turnaround in FY June 2025.

These positive expectations may seem far away as the economic situation in the next 12 months or so could look dimmer.

However, consensus is forecasting things to turn better for the company.

Analysts are projecting a full-year net loss of only RM6.3 million for FY June 2024, pointing to a turnaround in 2HFY24.

Thereafter, FYJune 2025 is expected to show strong earnings rebound to RM20.2 million to be boosted by rising progress billings of existing and new contracts.

Based on FY25 consensus net profit estimate of RM20.2 million, Econpile shares are
currently trading at a 1-year forward PER of 33.7x.

It reported a net loss of RM10.1 million for 2QFY24 versus net loss of RM1.6 million a year ago.

This brings 1HFY24’s cumulative net loss to RM13.3 million.

As an integrated provider, Econpile offers a full suite of piling and foundation services, which includes construction of bored piles, earth retaining systems and substructures.

Notable completed projects since inception include piling works for Klang Valley Mass Rapid Transit, LRT 3, Rapid Transit System Link and deep basement works for Pavilion Damansara Heights, Elite Pavilion, W Hotel and The Residences, and Oxley Towers.

The Group had a total of 25 ongoing projects as at 30 June 2023, primarily made up of high-rise property development projects in the Klang Valley and Cambodia.

During the period of FY2023, it completed 11 projects.

Econpile largest project located in Phnom Penh City in Cambodia contributed more than one-third of its total revenue in FY2023.

With construction activities expected to pick up, Econpile appears to be a good counter to ride on the boom.