Summary

• Econpile Holdings Bhd's (Econpile) 4QFY21 net profit stood at RM1.0m vs. a net loss of RM16.5m recorded in the previous corresponding quarter, boosted by higher revenue as Cambodia’s operations were un-interrupted. Revenue for the quarter jumped 206.2% YoY to RM93.9m. For FY21, cumulative net profit surged 373.5% YoY to RM11.0m. Revenue for the year added 4.3% YoY to RM420.4m.

• The reported earnings came in below expectations, accounting to 54.1% of our earnings forecast of RM20.4m and 35.0% of consensus forecast of RM31.6m. Meanwhile, the reported revenue was at 94.2% and 94.4% of our and consensus forecast of RM446.2m and RM445.5m respectively. The variance is mainly due to the implementation of Full Movement Control Order (FMCO) which affected billings due to delays in work progress.

• During the year, piling and foundation works for property projects remain as the largest contributor to the group’s revenue, representing 79.8% or RM335.2m of total revenue, with the remainder RM85.1m (20.2%) derived from piling and foundation works for infrastructure projects.

• For FY21, Econpile’s orderbook replenishment was slightly above RM500.0m. Moving into FY22f, we expect a similar orderbook replenishment rate (RM500m) with job flows to pick up in coming months as the country’s economic activities recover in line with the higher vaccination rate.

• Econpile is equipped with an unbilled construction orderbook of approximately RM830.0m. This represents an unbilled orderbook-to-cover ratio at 2.0x against FY21 revenue of RM420.4m that provide earnings visibility over the next two years.

• We foresee the piling and foundation for building projects to dominate over the near term. After chalking RM24.4m in revenue for 4QFY21, the Cambodia project is expected to see acceleration in FY22f. We note that local activities have seen improvements since mid-August with the group aiming to operate at full capacity once their workforce hits 100% vaccination rate, tentatively by end of this month.

Source: Mplus Research - 30 Sept 2021