Background
Econpile Holdings Bhd ('Econbhd') is involved in the provision of foundation and geotechnical works, civil engineering works, structure works and design and build packages.
Recent Financial Performance
Econbhd's profits have been rising gradually due to improved profit margins. Revenue, which was suffered a minor pullback in mid-2015, is again on a rising path.
Table: Econbhd's last 8 quarters' P&L
Chart 1: Econbhd's last 9 quarters' P&L
Financial Position
Econbhd's financial position is deemed healthy as at 31/3/2016 with current ratio at 2.4x and total liability to equity at 0.6x. Debtor collection period stood at 184 days- comparable to Pintaras's 206 days.
Valuation
Econbhd (closed at RM1.39 yesterday) is now trading at a trailing PER of 11.8x (based on last 4 quarters' EPS of 11.76 sen). At this PER, Econbhd is considered fairly valued. However, Econbhd's earning grew by 61% compared to the preceding 4 quarters. Assuming it can achieve a CAGR of 20%, its PEG ratio would be less than 0.6x. This would make the stock quite attractive.
Technical Outlook
Econbhd broke above its triangle at RM1.15 in late March. With this breakout, Econbhd's upleg has begun.
Chart 2: Econbhd's weekly chart as at Jun 9, 2016 (Source: ShareInvetor.com)
After the upside breakout, Econbhd consolidated between RM1.30 & RM1.40. It has just broken above this consolidation (an ascending triangle) at RM1.40. Is this a continuation of the upleg move or is it a fake breakout prompted by a dividend payment of 2.5 sen? We will have to wait and see.
Chart 3: Econbhd's daily chart as at Jun 9, 2016 (Source: ShareInvetor.com)
Conclusion
Based on good financial performance & position, fair valuation & mildly bullish technical outlook, Econbhd could be a good stock for long-term investment.
Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Econbhd.
ECONBHD (5253) - Econbhd: A Good Specialist Construction Stock
http://nexttrade.blogspot.my/2016/06/econbhd-good-specialist-construction.html
