- We maintain BUY on Econpile Holdings Bhd with an unchanged fair value of RM1.50/share – pegged at 14x FY16F PE.

- Econpile announced yesterday that it has secured a RM95.5mil contract for piling and related works for Arte Mont Kiara.

- The contract was awarded by Nusmetro Property Sdn Bhd to Econpile’s wholly-owned subsidiary, Econpile (M) Bhd.

- The contract involves earthworks, piling and basement construction work for a mixed development project in Mont Kiara.

- The duration of the contract is 19 months from Dec 2015 to June 2017. As such, the contract will contribute to the group’s earnings in FY16F and FY17F.

- The contract is part of the Arte Mont Kiara development, which will consist of three towers office suites and serviced residences. Econpile is currently completing works at Arte+ on Jln. Ampang, also being developed by the same client.

- This is the second major contract announced by Econpile for FY16F, and comes after only three weeks from the previous win. Recall that Econpile announced on 9 Nov that it secured a RM120.5mil piling job for a project in Jan Semarak.

- As such, Econpile has secured RM216mil worth of new jobs for FY16F thus far. This is positive and makes up 68% of our new order book replenishment of RM320mil for the year (FY15: RM490mil).

- With the latest win, Econpile’s outstanding order book is currently ~RM630mil (end-June: RM512mil).

- The latest win affirms our view that demand for piling jobs remains resilient given the upcoming property developments as well as major infrastructure works under the 11th Malaysia Plan. Tender book is healthy at ~RM1bil.

- Econpile’s 1QFY16F results are slated for release this Friday (27 Nov). We expect margins to be sustained at the current levels (4Q15 net margin: 13.5%), or even surprise on the upside due to better efficiency and lower raw material prices. Recall that margins had improved from 5% to 11% from FY11 to FY15.

- Maintain BUY. We like Econpile for its strong track record as a leading piling specialist, continued improvement in margins, and sustainable contract flows on healthy demand.

Source: AmeSecurities Research - 25 Nov 2015