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Econpile Holdings Bhd – 22nd Feb 21

The latest win bumps Econpile's outstanding orderbook of approximately RM950.0m, which translates to an orderbook-to-cover ratio of 2.4x against FY20 revenue of RM403.0m that provide earnings visibility over the next 2 years. Following the washout year in FY20, we believe that earnings recovery is largely on track with construction activities begun to normalise which was already demonstrated in 1QFY21.

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market pulse

Bargain hunting may take shape

The FBM KLCI surrendered its gains amid hawkish comments from the Feds, alongside its regional peers. However, with the strong rebound overnight on Wall Street, coupled with the gradual subsiding in Covid-19 daily cases, bargain hunting may lift the sentiment on the local bourse. Also, we believe market participants should focus on recovery theme stocks given the vaccination rate is improving in Malaysia. Meanwhile, the oil price climbed near the USD75 on the back of weaker USD; while the CPO price continued its downtrend move.

Jaks Resources Bhd – 21st Jun 21

JAKS is primed for charting new heights, supported by the diversification into the long-term recurring income from the power generation concession in Vietnam, coupled with the on-going efforts to improve tenancy ratio under the property development segment. Whilst the concession segment will generate earnings sustainability, current construction orderbook of RM281.3m is able to provide earnings visibility till 2022. We assigned a P/E multiple of 9.0x to all, but the concession segment that is valued on a discounted cash flow approach, arriving at a fair value of RM0.72.

technical focus

Technical Focus – UCHITEC

Established track record, backed by key clienteles from the European countries industry top players such as Jura and Nestle (Switzerland), AEG, Krups, Bosch and Siemens (Germany). Expects mild impact from the imposition of Full Movement Control Order (FMCO) whereby only 60.0% capacity are allowed for operation and subsequently recovery is largely on the table, premised to the sustainable strong demand. Prospective dividend yields at 5.4% and 5.5% for FY21f and FY22f deemed to be relatively attractive. Technically, traders may anticipate for a breakout above RM3.22, targeting the next resistances at RM3.35-3.52 with long term target at RM3.60.

market pulse

Striding high, but volatility still a feature

The FBM KLCI snapped the three consecutive sessions of losses on the back of bargain hunting activities after recent selldown, bucking the downtrend in the regional markets. Investors may continue to stay defensive amid the ongoing battle of the Covid-19 health pandemic and the recent political developments, but the downside risks may be cushioned by the rising daily vaccination rate as the government target to achieve 80% herd immunity by the third quarter of this year. Meanwhile, the constituents changes following the semi-annual review of the FTSE Bursa Malaysia Index Series will be taking effect today.

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