AWC has proposed a bonus issue of free warrants, a new ESOS, and a share buy-back of up to 10% of its issued shares. Proceeds of up to RM78.9m from the warrants and RM34.6m from the ESOS will be used to strengthen its capital base and enhance funding flexibility across the engineering, environmental, and facilities-management divisions.
We are Mildly Positive on these corporate proposals, which are expected to strengthen AWC’s capital structure and enable the Group to secure higher-value projects and support future growth. The exercises are expected to dilute FY26F EPS by 28.2% on a fully diluted basis.
We are keeping our earnings forecasts unchanged at this stage, pending completion of the proposed exercises.
Maintain BUY recommendation with an unchanged TP of RM0.92, based on 9x FY26F EPS of 10.2sen, supported by a three-star ESG rating.
Bonus Issue of Warrants, ESOS and Share Buy-Back. AWC Berhad has proposed several corporate exercises aimed at rewarding shareholders and supporting future growth.
The Group plans to undertake a bonus issue of up to 84.8m free warrants on the basis of one warrant for every four existing shares held. The warrants will carry a five-year tenure, with the exercise price to be fixed at a 20-30% premium to the 5-day VWAP prior to the price-fixing date. The exercise of these warrants is expected to provide additional working capital to fund business expansion.
The Company will introduce a new Employee Share Option Scheme (ESOS) representing up to 15% of its total issued shares, excluding treasury shares, with option prices to be determined at up to a 10% discount to the 5-day VWAP prior to the grant. The ESOS will be in force for five years and may be extended by another five years, serving as a performance-based incentive to strengthen employee retention.
AWC also proposes a share buy-back of up to 10% of its issued shares, providing flexibility in capital management.
All proposals are expected to be completed by 1QCY26, subject to shareholders’ and regulatory approvals.
Based on an indicative exercise price of RM0.93/warrant and RM0.68/ESOS option, assuming full exercise of both, AWC could raise gross proceeds of up to RM78.9m from the warrants and RM34.6m from the ESOS options. The rationale for these corporate exercises is mainly to enhance financial flexibility and support business expansion across its core engineering, environmental, and facilities-management segments. On a pro forma basis, these exercises are expected to improve AWC’s gearing ratio from 0.42x as of 30 June 2025 to 0.28x.
Table 1: Pro Forma Effects of the Corporate Exercises
Audited as of 30 June 2025 | After assuming full exercise of the Bonus and ESOS | |
RM'm | RM'm | |
| Share capital | 129.5 | 243.0 |
| Treasury shares | -1.3 | -1.3 |
| Other reserves | 8.8 | 8.8 |
| Reserves | 92.1 | 91.8 |
| Shareholders’ fund/ NA | 229.1 | 342.3 |
| ||
| No. of shares in issue (‘000) | 339.4 | 475.1 |
| Total borrowings (RM’000) | 97.2 | 97.2 |
| NA per Share (RM) | 0.68 | 0.72 |
| Gearing ratio (times) | 0.42 | 0.28 |
Source: Company, Apex Securities
Our Take. We are Mildly Positive on these proposals. The funds raised from the full exercise of the warrants and ESOS options are expected to strengthen AWC’s capital base and financial profile, enabling the Group to secure higher-value projects across its engineering, environmental, and facilities-management divisions, supporting a sustained long-term growth trajectory. Nevertheless, the corporate exercises, if fully exercised, are expected to dilute FY26F EPS by 28.2% under a fully diluted scenario, resulting in a fair value of RM0.66.
Earnings revision. No change to our earnings forecasts at this stage, pending completion of the exercises. We have updated our FY25 figures based on the latest Annual Report.
Valuation & Recommendation. We maintain our BUY recommendation with an unchanged TP of RM0.92, based on 9x FY26F EPS of 10.2sen and supported by a three-star ESG rating. 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.
Disclaimer
The report is for internal and private circulation only and shall not be reproduced either in part or otherwise without the prior written consent of Apex Securities Berhad. The opinions and information contained herein are based on available data believed to be reliable. It is not to be construed as an offer, invitation or solicitation to buy or sell the securities covered by this report.
Opinions, estimates and projections in this report constitute the current judgment of the author. They do not necessarily reflect the opinion of Apex Securities Berhad and are subject to change without notice. Apex Securities Berhad has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate.
Apex Securities Berhad does not warrant the accuracy of anything stated herein in any manner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against Apex Securities Berhad. Apex Securities Berhad may from time to time have an interest in the company mentioned by this report. This report may not be reproduced, copied or circulated without the prior written approval of Apex Securities Berhad.
| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 4.180625 | 4.213774 |
| EUR | 4.824538 | 4.829295 |
| CNY | 0.588551 | 0.589133 |
| HKD | 0.537960 | 0.541723 |
| SGD | 3.201822 | 3.227428 |