- We maintain BUY on Econpile Holdings Bhd with an unchanged fair value of RM1.40/share – pegged to 15x FY15F PE.

- The group has secured the eighth major piling job for FY15F. Its subsidiary, Econpile (M) Sdn Bhd, announced yesterday that it had won a RM29.4mil contract for piling and related works for the TWY@Mont Kiara duplex condominiums.

- The contract was awarded by TWY Development Sdn Bhd (a subsidiary of Symphony Life Bhd), and entails earthworks, piling, and basement construction works.

- The duration of the job is for 14 months and is expected to be completed by July 2016. The contract is part of the TWY@Mont Kiara development comprising two 51-storey blocks of SoHO units, a seven-storey podium and a threestorey basement carpark. The GDV of the project is RM250mil.

- The latest win extends Econpile’s strong newsflow in building up its order book since it was listed at end-June last year.

- For FY15F so far, it has won RM414mil worth of major jobs (which is at parity to FY14’s topline of RM418mil).

- Together with this, the group’s total outstanding order book exceeds RM540mil, which will keep the group busy over FY15F/FY16F.

- We emphasise Econpile’s outstanding order book that mainly comprises property-related jobs as these yield higher margins compared to those of infrastructurerelated ones. Recall that it had completed the two KVMRT1 packages in Feb which yielded lower margins (due to it being a greenfield project).

- As such, our investment thesis of expanding margins remains intact as it progressively books earnings from the property-related jobs. Recall that its net margin expanded to 10.2% in 2QFY15F (from 8.9% in 1Q, and 6.4% in 4QFY14). We forecast net margin at 10.1% for FY15F (+2.7ppts from 7.4% in FY14; 1HFY1: 9.6%).

- With the latest win, we have increased our new order book assumption to RM420mil (vs. RM400mil earlier). However, our earnings are unchanged as we make adjustments to reflect the higher capex this year.

- As for the upcoming KVMRT2 project, we believe Econpile stands a strong chance to secure jobs due to its track record. Maintain BUY.

Source: AmeSecurities Research - 23 Apr 2015