AWC: Contract Win Boosts Order Book, Analyst Maintains Hold Rating
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.66 (+5.6%) |
| Last Traded | RM0.625 |
| Recommendation | HOLD |
A significant contract win in Singapore has reinforced a Malaysian engineering group’s leadership in automated waste collection systems and enhanced its earnings visibility. The new project, secured by the group’s wholly-owned subsidiary, Stream Environment (S) Pte Ltd (SESG), is expected to bolster the company’s order book and strengthen its regional footprint.
Contract Details
SESG has been awarded a Letter of Acceptance (LoA) by Singapore’s Housing & Development Board (HDB) for the design, build, and operation of a Pneumatic Waste Conveyance System (PWCS) at Project EW & FM. Valued at SGD4.6 million (approximately RM14.8 million), the contract will be executed in two phases: 12 months for design works, followed by 24 months for construction. This latest achievement brings the group’s cumulative contract wins in the current fiscal year (FY26) to approximately RM270 million, further solidifying its presence in Singapore’s PWCS market.
Analyst’s Outlook
Analysts view this contract win positively, noting that it reinforces the group’s established leadership in automated waste collection systems and provides crucial earnings visibility for the next three years from the commencement date. The new contract is projected to expand the group’s order book from RM855.1 million to RM869.9 million, representing a robust 2.1x cover ratio over FY25 revenue. Assuming a conservative net profit margin of approximately 20%, the contract extension is expected to contribute around RM3.0 million to earnings over the period. Despite the positive development, the analyst has maintained its earnings forecast, as the job win was within expectations.
Investment Recommendation
Given these factors, the investment bank has maintained its “HOLD” recommendation for the company with an unchanged target price of RM0.66. The target price is derived based on a price-to-earnings (P/E) ratio of 10.0x pegged to the mid-FY27f fully-diluted earnings per share of 6.58 sen.
