AWC Berhad - RM99.1m IFM Contract from TM Technology Services
Fri, 31-Oct-2025 07:35 am
by Tan Sue Wen • Apex Research

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AWC (7579)

Target Price (RM)

0.92

Recommendation

Buy

  • AWC has secured an RM99.1m Integrated Facilities Management (IFM) contract from TM Technology Services Sdn Bhd, a wholly-owned subsidiary of Telekom Malaysia Berhad, for the operation and maintenance of TM Data Centres and Buildings in TM Central 1. The five-year contract lifts AWC’s outstanding order book to c.RM791.2m (1.9x FY25 revenue).

  • The award is viewed positively, as it provides predictable cash flow and reinforces earnings visibility up to FY31.

  • We have raised our FY26F-FY28F earnings forecasts by 4.9%/5.7%/5.6% respectively, to reflect the stronger order book replenishment and improved earnings visibility.

  • Maintain BUY recommendation with a revised target price of RM0.92 (previously RM0.88), based on 9x FY26F EPS of 10.2 sen, supported by a three-star ESG rating.

 

RM99.1m Integrated Facilities Management Contract from TM Technology Services. AWC, through its wholly-owned subsidiary Ambang Wira Sdn Bhd (AWSB), has accepted a Letter of Award (LoA) from TM Technology Services Sdn Bhd, a wholly-owned subsidiary of Telekom Malaysia Berhad, for the provision of Integrated Facilities Management (IFM) services for TM Data Centres and Buildings in TM Central 1. The five-year contract, valued at RM99.1m (inclusive of SST), will commence from 1 November 2025 to 31 October 2030. The scope covers comprehensive IFM services, including operations, maintenance, and support for TM’s data centre and building facilities at TM Central 1.

 

Our Take. We view the award positively, as it provides predictable cash flow and reinforces AWC’s earnings visibility up to FY31. Assuming a PBT margin of 10% (after excluding the impact of SST), the contract is expected to generate c.RM9.3m in total PBT over the five-year period, translating into an annual PBT contribution of around RM1.9m. Incorporating this win, AWC’s outstanding order book is estimated at RM791.2m, equivalent to 1.9x FY25 revenue, further supporting medium-term earnings visibility.

 

Outlook. This contract marks AWC’s first entry into the data-centre IFM segment, and we remain constructive on its prospects, as margins are likely to be higher given the project’s technical complexity and stringent service requirements. The award also provides a strategic platform for AWC to expand its footprint in the fast-growing data-centre and digital infrastructure space. In the near term, growth will be supported by the expiry and re-tendering of several federal concession contracts in Dec 2025, which had previously compressed margins due to elevated operating costs. The federal concessions, representing about 30% of IFM segmental revenue, are expected to be renewed under a revised framework that better accounts for cost inflation and asset lifecycle management. We believe AWC is well-positioned for renewal, supported by its established two-decade track record in managing 31 federal concession contracts.

 

Earnings revision. Following the recent contract wins, AWC has surpassed our earlier contract award assumptions. As a result, we have raised our FY26F-FY28F earnings forecasts by 4.9%/5.7%/5.6% respectively, to reflect the stronger order book replenishment and improved earnings visibility.

 

Valuation. Post-earnings adjustment, we derive a new TP of RM0.92 (from RM0.88), based on 9x FY26F EPS of 10.2sen, supported by a three-star ESG rating. Maintain BUY. We like AWC for its (i) leading AWS system market share (90% in Malaysia, 40% in Singapore), (ii) predictable cash flows from both concessionaire and non-concessionaire segments, and (iii) promising growth prospects from untapped projects in Abu Dhabi, which collectively represent a potential RM1bn order book.

 

Risks. Failure to secure improved rates for government concession contracts under the IFM segment, slower-than-expected order replenishment in the Environment segment, and potential delays in mega infrastructure projects that could weigh on Rail segment prospects.

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