AWC: Significant Contract Wins Boost Earnings Visibility, Recommendation Upgraded

A leading engineering group has announced a significant boost to its order book, securing three new contracts for automated pneumatic waste collection systems (AWCS) across Malaysia and Singapore. These wins, valued at a combined RM26.6 million, are set to significantly enhance the company’s earnings visibility through fiscal years 2026 to 2029.

Performance Review and New Contracts

The contracts, awarded in January and February 2026, encompass the design, build, and operation of AWCS projects. While commencement began in January 2026, completion is anticipated by August 2029. These latest additions bring the cumulative major contract wins for FY26 to approximately RM450 million, underlining the company’s strong track record in advanced waste management solutions and its proven capability in delivering public-sector projects, particularly in Singapore.

Analysts view these contract wins positively, highlighting their role in strengthening the Environment Division. Assuming a conservative net profit margin of 10%, these contracts are expected to contribute around RM2.7 million to the company’s earnings over the duration of the projects, aligning with previously established expectations.

Future Outlook and Recommendation

Despite the positive contract news, the company’s share price had experienced a decline prior to this announcement. This pre-emptive decline prompted an upgrade in the investment bank’s recommendation from Hold to Buy. The target price remains unchanged at RM0.66, reflecting a potential upside of 10.9% from the last traded price of RM0.595.

The target price is derived based on a 10.0x price-to-earnings (P/E) ratio pegged to the mid-FY27f fully-diluted earnings per share of 6.58 sen. With earnings forecasts maintained following these job wins, the outlook remains stable, driven by the increased project pipeline and consistent operational performance.