AWC Berhad - Secures RM63.7m One-Year Federal Concession Extension
Fri, 14-Nov-2025 07:47 am
by Tan Sue Wen • Apex Research

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AWC (7579)

Target Price (RM)

0.92

Recommendation

Buy

  • AWC has secured an estimated RM63.7m one-year extension for its Building Support Services Concession Agreement for Federal Government buildings in the Southern and Sarawak Zones. The Interim Agreement, effective 1 Jan 2026 to 31 Dec 2026, lifts AWC’s outstanding order book to c.RM855.0m (2.1x FY25 revenue).

  • We view the award positively, as the 15.8% higher annualised value (vs. RM55m/year previously) better accounts for cost inflation and supports earnings visibility up to FY27.

  • No changes to earnings forecasts, as the latest contract win falls within our FY26F order book replenishment assumptions.

  • Maintain BUY with an unchanged TP of RM0.92, based on 9x FY26F EPS of 10.2 sen, supported by a three-star ESG rating.

 

RM63.7m One-Year Interim Concession Extension. AWC, through its wholly-owned subsidiary Ambang Wira Sdn Bhd (AWSB), has received confirmation from the Ministry of Works (KKR) that the Government of Malaysia has approved a RM63.7m one-year extension of the existing Building Support Services Concession Agreement for Federal Government buildings in the Southern Zone and Sarawak Zone. The Interim Agreement is effective 1 Jan 2026 to 31 Dec 2026.

 

Our Take. We view the award positively, as the pricing now reflects a 15.8% higher annualised value compared to the previous RM55m/year contract, better accounting for cost inflation. This supports a gradual recovery in AWC’s earnings visibility up to FY27. Assuming a PBT margin of 6%, the contract is expected to generate c.RM3.8m in PBT over the period, translating into c.RM1.9m to be recognised in FY26 (4.3% of our FY26F forecast) and c.RM1.9m in FY27 (3.7% of our FY27F forecast). Incorporating this win, AWC’s outstanding order book is estimated at RM855.0m, equivalent to 2.1x FY25 revenue, further reinforcing its medium-term earnings visibility.

 

Outlook. The successful extension underscores AWSB’s proven execution track record and reinforces its position in federal building support services. The interim award strengthens our conviction that AWC stands a strong chance of securing the upcoming full-term renewal, which would support a recovery in the segment’s earnings profile, given that federal concessions represent about 30% of IFM segmental revenue. Backed by its two-decade operating history and experience managing 31 federal concession contracts, we believe AWC remains the leading contender for the long-term concession award.

 

Earnings revision. We make no changes to our earnings forecasts, as the latest contract win falls within our FY26F order book replenishment assumptions.

 

Valuation. 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.

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