- We maintain BUY on Econpile Holdings Bhd with an unchanged fair value of RM1.28/share – pegged to a PE of 15x FY15F EPS.

- The group announced yesterday that it has secured a RM35.4mil job to undertake substructure works for a serviced apartments project at Lorong Stonor.

- The letter of award was awarded by Cipta Klasik (M) Sdn Bhd and comprises earthworks, bored piling, contiguous bored pile and basement substructure works.

- The duration of the job is 15 months and is expected to commence on 7 Oct.

- This is the fourth job that the group has announced since its listing on 30 June. In total, the group has secured RM171mil worth of new jobs for FY15F. Recall that the group has secure three jobs worth RM135.5mil since its listing.

- The new contract win fortifies our view of Econpile as a leading piling contractor in the market. We expect more new jobs to follow through given its strong tender book of RM2bil.

- Notably, the group is bidding for more building jobs which command higher margins compared to that of infrastructure jobs. Its KVMRT2 job is expected completion next month and will free up 10-12 machines.

- As such, we believe that Econpile will be able to secure more building jobs moving forward. We have a conservative new order book replenishment of RM320mil for FY15F.

- We expect net margins to improve by 1-2ppts per annum as the group focuses on building jobs which yield better margins. Note that as at end-June, 10% of its estimated outstanding order book of RM490mil are infrastructure-related.

- Given its experience in the KVMRT1 project, we expect Econpile to be a frontrunner for piling works in KVMRT2.

- It is also in a net cash position and has adopted a 20% payout dividend policy.

- Econpile is a strong beneficiary of rising jobs flow, with strong execution and concerted efforts to improve margins. Maintain BUY.

Source: AmeSecurities