Following a 37.5% slump from 52-week high of RM0.705 (10 June 2020) to RM0.44 yesterday, ECONBHD provides an attractive risk-reward profile at 14.2x FY22E P/E (vs 5Y mean 20x), supported by order book ~RM900m (provides earnings visibility over the next two years), contributions from the Cambodia project and crystallization of variation orders’ for certain key projects. As ECONBHD remains the market leader in the piling and foundation with its expertise in undertaking complex and larger scale jobs, it stands as one of the major beneficiaries should the green shoots of construction revives in 2H21 when more doses of vaccines have been administered in Malaysia.

Pending a double bottom formation. We see a double bottom pattern taking place soon, suggesting that the next leg up is currently underway. A successful breakout above the RM0.475 neckline resistance could potentially spur prices higher towards RM0.52 (200D SMA and private placement place) and our LT objective at RM0.59 (9 Dec). Supports are pegged at RM0.40 and RM0.38. Cut loss at RM0.37.

Source: Hong Leong Investment Bank Research - 5 Mar 2021