The latest win bumps Econpile’s outstanding orderbook to RM700.0m, which translates to an orderbook-to-cover ratio of 1.1x against FY19 revenue of RM663.3m and will provide earnings visibility till final quarter of year 2021. We are sanguine that earnings recovery will be materialise from FY21 on the back of the resumption of supply chain such as concrete, cement, steel and etc
Still Choppy Ahead
We see the consolidation on the FBM KLCI taking shape as the rally in glove heavyweights lose steam following the positive developments from Moderna in their clinical trial test on Covid-19 patients. For now, investors will be keeping an eye on China’s 2Q2020 GDP data today as a yardstick to economic recovery performance after lifting the lockdown.
Consensus are expecting a slowdown in economic activities for 2020, but we believe the stimulus packages from several central banks would be able to cushion the downside risk and may translate to a potential recovery in 2021. For the local markets, we expect the trading interest to crowd around gloves or healthcare stocks.
Pecca Group Bhd (PECCA) principally involved in the styling, manufacturing and distribution of leather car seat covers for Original Equipment Manufacturer (OEM) and Pre-Delivery, Inspection (PDI) and Replacement Equipment Manufacturer (REM) market segments with bulk of its sales to Toyota Boshoku UMW Sdn Bhd (Toyota) and Fuji Seats (Malaysia) Sdn Bhd (Perodua). We reckon that vehicle sales will see gradual improvement after vehicle sales rose to 22,960 units in May 2020 vs. only 141 units sold in April 2020.