AWC: Contract Extension Bolsters Order Book, Analysts Maintain Hold

A wholly-owned subsidiary of AWC Berhad, Ambang Wira Sdn Bhd (AWSB), has successfully secured a one-year extension for its existing 10-year Concession Agreement for Building Support Services across the Southern (Melaka, Negeri Sembilan, and Johor) and Sarawak zones. The extension, officially confirmed by the Ministry of Works (KKR), will run from January 1, 2026, to December 31, 2026, and is estimated to be worth RM63.7 million based on prevailing rates and the current scope of services, including the Critical Asset Refurbishment Programme (CARP).

Analyst View and Impact

Analysts at Malacca Securities view this contract extension as a positive development, primarily because it ensures another year of recurring income from the government concession business. This provides crucial earnings visibility through to the end of FY26. The extension is expected to significantly expand AWC’s order book from RM791.4 million to RM855.1 million, representing a robust 2.1x cover ratio over the company’s FY25 revenue. Furthermore, assuming a net profit margin of approximately 10%, this additional year is projected to contribute around RM6.4 million to the company’s earnings during the period.

Despite the positive news of the contract win, Malacca Securities noted that this development was within their existing expectations. Consequently, the firm has maintained its earnings forecast for AWC Berhad. They have indicated that a reassessment of their earnings assumptions, if deemed necessary, would occur following the release of the upcoming first quarter FY26 results.

Recommendation and Outlook

Malacca Securities has reiterated its “HOLD” recommendation for AWC Berhad, with an unchanged target price (TP) of RM0.66. The target price derivation is based on a price-to-earnings (P/E) ratio of 10.0x, pegged to mid-FY27f fully-diluted earnings per share of 6.58 sen. The last traded price for the company was RM0.650.