Following several contracts being awarded to ECONBHD since October, it has brought YTD orderbook to c.RM900m, which may sustain the earnings for next two years. Moving forward, we believe mega projects such as KVDT, ECRL, KL SG HSR and MRT3 could be seen as next catalyst to drive earnings for ECONBHD. Based on our proprietary indicator, ECONBHD could be moving in a sustainable rally from this level onwards. Resistance will be set around RM0.85- 0.87, with a LT target set around RM0.98. Support is pegged around RM0.73- 0.74, with a cut loss located around RM0.71.

One-stop foundation specialist. ECONBHD is a full range of piling (bored piling, driven piles and jack-in piles) and foundation specialist in Malaysia providing piling solutions and foundation works, which includes earth retaining systems, earthworks, substructure and basement construction works. To date, the group has completed more than RM2.5bn worth of piling and foundation services encompassing numerous infrastructure and property development projects in the Klang Valley, Penang, Johor, Pahang, Sabah and Sarawak.

Improving job orders. We have noticed since October 2019, ECONBHD has managed to clinch several contracts from Tropicana and WCT, boosting its YTD orderbook to c.RM900m, which could sustain the earnings over the next two years.

Healthy prospects moving forward. Pipeline of job opportunities that could emerge in the future include the Klang Valley Double Track, ECRL, KL-SG HSR, and Klang Valley MRT 3 and ECONBHD is likely to become a major contender to capture a slice of the jobs given its proven track record.

Sideways consolidation breakout. The share price has breached above the upper band of the consolidation phase at RM0.76 with improved volumes. Based on our proprietary indicator, uptrend momentum has established since early November and it may head for further rally towards RM0.85-0.87, with a LT target located around RM0.98. Support will be anchored around RM0.73-0.74, with a cut loss set at RM0.71.

Source: Hong Leong Investment Bank Research - 18 Nov 2019