PETALING JAYA: A couple of long-term positive trends bode well for piling contractor Econpile Holdings Bhd
, fuelling its earnings momentum.
CGS International (CGSI) Research said the positive trends for piling contractors like Econpile were the relaxation of the 100% en-bloc sales requirement for existing strata title holders, and the recent sinkhole incident in Kuala Lumpur.
“The relaxation of the 100% en-bloc sales requirement for existing strata title holders will spur construction activity within urban areas. Kuala Lumpur City Hall (DBKL) has already identified 139 potential sites covering about 1,372 acres.
“The scarcity of prime land in the KLCC vicinity, where older buildings sit on low plot ratios, represents an opportunity for a piling contractor like Econpile.
“The second is the more recent sinkhole incident where DBKL is strengthening standard operating procedures by ensuring geotechnical studies are compulsory and done at an early stage.
“This could also bode well for piling companies like Econpile, which has bored-pile expertise that can be used to mitigate future sinkholes,” the research house added.
The company also expects new order wins of RM400mil to RM450mil for financial year 2025 (FY25), matching FY24 levels.Its latest property-contract win involves the demolition, substructure and basement works for a 55-storey development comprising 223 units of offices, a 329-room hotel and 245 units of small office home offices with five levels of basement parking on Jalan Sultan Ismail, Kuala Lumpur for RM71.2mil.
The project will be completed within 28 months starting from Sept 2, 2024.
This brings the company’s year-to-date FY25 new wins to RM98mil.
Econpile’s tender book currently stands at RM1bil, of which 90% are property projects, which have higher margins versus infrastructure.
There has been just one legacy project, which has been a drag on its gross profit margins. This is the second phase of Pavilion Damansara Heights with outstanding work of just RM20mil and a target completion date of December 2024.
“As such, after many disappointing quarters in the red, we expect earnings to recover in FY25 on a gradual basis and for the first quarter of FY25 to likely be profitable,” the research house added.
