• Econpile’s 3QFY16 net profit added 43.0% Y.o.Y to RM17.9 mln, owing to the higher contributions from its ongoing foundation work on property development projects, which yields higher margins compared to piling works for infrastructure projects. Revenue for the quarter improved 7.0% Y.o.Y to RM122.1 mln.
• For 9MFY16, cumulative net profit gained 49.9% Y.o.Y to RM49.0 mln. Revenue for the period rose 2.6% Y.o.Y to RM333.7 mln. The reported earnings came in slightly above our expectation accounting to 78.9% of our previous FY16 estimated net profit of RM62.1 mln, while the reported revenue was in line with our expectation accounting to 75.2% of our full year revenue forecast of RM443.9 mln. A single-tier dividend of 2.5 sen per share was declared, payable on 28th June 2016.
• Econpile’s gross profit improved 38.5% Y.o.Y to RM29.8 mln on the back of piling and foundation works which yields higher margins and amounted to 99.4% or RM331.8 mln of the group’s 9MFY16 revenue, coupled with higher operational efficiency. We also think that the improvement in margins will be sustainable given the group’s continuous effort in the execution of its capital expenditure plans.
• Going forward, we expect its EBITDA margin to maintain at the current 24.0%-25.0% levels (from 18.9% in FY15) in both FY16 and FY17 respectively. The improvement will be backed by the recognition of piling and foundation work for property development projects secured in the past 18-24 months (higher margin) as oppose to the completion of piling and foundation works for infrastructure projects (primarily the package V1 and V6 of KV MRT Line 1) in FY15.

Source: M+ Online Research - 26 May 2016