Econpile to gain from govt projects, residential jobs

PETALING JAYA: CGS International (CGSI) Research believes that piling and foundation company Econpile Holdings Bhd is set to benefit from the revival in government infrastructure spending.

Key rerating catalysts for the company are the rollout of mega infrastructure and property projects.

Key downside risks include delays in the rollout of big projects and higher raw material costs, CGSI Research said in a report yesterday.

It has a target price of 46 sen on the stock, an upside of over 43% from the 32 sen it was trading at, at the time the report was written.

“We hosted a conference call for institutional investors with key management figures of Econpile on March 3.

“Management said it is still seeing consistent tenders for residential projects in the medium-cost segment of the market.

“But it believes there needs to be a more material pick up in government infrastructure projects to ensure higher utilisation of its machinery,” the research house said.

The activity in the residential sector is because most developers are no longer doing extensive basement works, which requires more piling, due to time and cost issues, CGSI Research added,

The research house said it only expects a meaningful pick up in revenue in the fourth quarter of Econpile’s financial year ending June 30, 2025 (4Q25), once it resolves key issues surrounding three key projects that were affected by changes in design, infrastructure-encroachment issue and land acquisition.

“This was reflected in the 37% year-on-year decline in revenue to RM69mil in 2Q25.

“We estimate these projects contributed 45% to its RM421mil order book in February,” the research house said.

“In particular, the company’s RM72mil project for Platinum Victory Property Sdn Bhd that involves work on a high-rise development in Kuala Lumpur, was impacted by an infrastructure-encroachment issue.

“This is expected by management to be resolved by mid-March. Thereafter, work would resume and contribute to 4Q25 earnings,” the research house said.

“The other project in Mont Kiara facing design changes is also gradually progressing.

“We anticipate that the road upgrading project in Pahang may be slow in resolving land-acquisition issues, said CGSI Research.

The research also said, while 95% of Econpile’s RM1bil tender book was for residential projects, it expects the tenders for infrastructure projects to rise this year and next due to projects such as light rail transit (LRT) projects in Penang and Johor.

Econpile was already doing a small test-pile package for the RM8.3bil Penang LRT project and the tender was expected open in March or April this year, the research house said.