STOCK FOCUS OF THE DAY
Econpile Holdings : Secures RM208mil Jalan Ampang contract
BUY
We maintain BUY on Econpile Holdings Bhd with an unchanged
fair value of RM1.90/share – pegged at 14x FY17F PE. Econpile has secured a
RM208mil contract to undertake piling works for a mixed commercial development
on Jalan Ampang. The contract was awarded by Oxley Rising Sdn Bhd. The contract
entails bored piling and pilecaps, diaphragm walls, earthworks, foundation and
substructure works. The duration of the contract is 26 months. Based on
reports, Oxley Rising (part of Singapore-listed Oxley Holdings) is building a
three-tower development ranging from 28 to 79 storeys on three acres of land in
Jalan Ampang.
We are pleasantly surprised with the latest win – which
brings Econpile’s new job wins in FY16F to RM655mil (FY15: RM490mil). This has
surpassed our replenishment target of RM500mil by 31%. Nevertheless, as we had
previously guided, we believe any jobs secured this month will only contribute
strongly to the group’s earnings from FY17F. Hence, we make no changes to our
numbers. For FY17F, we have a new order book target of RM450mil with potential
upside. The latest win is timely as 20% of the group’s capacity will be freed
up following the completion of a few projects next month. Given the scope and
nature of the latest job, we believe margins should be attractive. Outstanding
order book of RM778mil will support earnings until 2018. We believe more jobs
will flow through in the coming months with potential wins from KVMRT2,
highways (SUKE, DASH, DUKE). All in, we continue to like Econpile for its
strong track record as a leading piling specialist, continued contracts wins on
resilient demand, and stable margins. Since its listing, net margin has
expanded from 6.5% to 15%. Maintain BUY. Econpile is currently trading at 11x
PE.
Others :
UMW Oil & Gas Corporation : Temporary band-aid with
inter-co loan HOLD
QUICK TAKE
UMW Holdings : Intercompany loan to O&G
unit
HOLD
NEWS HIGHLIGHTS
Airlines Sector : Aircraft leasing back in vogue
Manufacturing Sector : Favelle Favco eyes M&A to
consolidate in downturn
Property Sector : Oriental Holdings may buy more hotels in
Asia Pacific
Oil & Gas Sector : Sona Stag Oilfield deal terminated
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