AWC’s 3QFY26 CNP rose 59.8% QoQ and 44.1% YoY to RM6.8m, bringing 9MFY26 CNP to RM15.4m (-5.8% YoY), representing 68% of our full-year forecast and 73% of consensus estimates. The results missed expectations mainly due to weaker-than-expected margin performance within the Environment division amid ongoing Middle East operational disruptions.
Outstanding orderbook stood at RM865m, equivalent to 2.1x FY25 revenue, providing healthy medium-term earnings visibility.
We trim our FY26F-FY28F earnings forecasts by 6.6%-5.6%, mainly reflecting more conservative assumptions for the Environment division amid prolonged geopolitical uncertainties, logistics disruptions and weaker UAE margin assumptions.
Maintain BUY with a lower TP of RM0.65 (from RM0.69), based on 9x FY27F EPS of 7.3 sen (revised down from 7.7 sen), supported by a three-star ESG rating.
Missed expectations. After adjusting for EIs (+RM0.7m), AWC’s 3QFY26 core net profit (CNP) came in at RM6.8m (+59.8% QoQ, +44.1% YoY). This brings our 9MFY26 CNP to RM15.4m representing a belowexpected 68% of our full-year forecast and an inline 73% of consensus estimate. The performance was primarily due to higher project progress and higher order fulfilment and project deliverables for the Environment division and Rail division.
QoQ. CNP increased by 59.8% to RM6.8m in 3QFY26 (vs RM4.2m in 2QFY26), supported by stronger project execution and order fulfilment activities within the Rail and Environment divisions. Group revenue increased 9.8% QoQ to RM115.9m, mainly driven by a sharp recovery in Rail segment revenue (+139.5% QoQ) due to higher project deliverables during the quarter under review. Meanwhile, Environment division revenue improved 16.1% QoQ on higher project progress in the Singapore region. This more than offset weaker contribution from the Engineering division (-10.4% QoQ), which saw slower plumbing project progress, as well as slightly lower Facilities division revenue (-4.7% QoQ). Consequently, group PBT margin improved to 7.0% from 5.7% in 2QFY26.
YoY. AWC’s 3QFY26 core net profit increased 44.1% YoY to RM6.8m, driven by stronger Engineering and Rail segment contribution. Group revenue rose 17.5% YoY to RM115.9m, supported by higher project execution activities and order fulfilment during the quarter. However, group PBT margin eased to 7.0% from 7.8% in 3QFY25, mainly due to weaker profitability within the Environment and Rail divisions arising from a softer margin mix.
Outlook. We remain cautiously positive on AWC’s medium-term earnings outlook, supported by its healthy outstanding orderbook of RM865m as at end of March 2026, which should continue to provide earnings visibility over the coming financial periods. The Facilities division is expected to remain resilient, underpinned by recurring concession-based income and the concession extension for the Southern Region and Sarawak until Dec of 2026. Meanwhile, we continue to favour the Engineering division’s longer-term growth prospects, supported by strengthening orderbook replenishment and increasing exposure towards higher specification and infrastructure-intensive projects, including data centre-related developments. We also expect the Rail division to benefit from ongoing procurement activities, project replenishment efforts and growing emphasis on recurring maintenance and service-based activities, which could support more stable medium-term earnings contribution. That said, we remain mindful of persistent headwinds within the Environment division, where project execution in the Middle East continues to face operational and logistics-related disruptions amid ongoing geopolitical uncertainties in the Gulf region. Rising logistics and supply chain costs may also continue to exert pressure on divisional margins in the near term.
Orderbook. AWC’s outstanding orderbook stood at RM865m as at end of March 2026. This backlog represents 2.1x FY25 revenue, providing a solid earnings visibility. The orderbook composition remains anchored by the Facilities division (48.0%), followed by Environment (24.9%), Engineering (16.3%), with the remaining balance attributed to the Rail segment.
Earnings Revision. Following a change in analyst, we trim our FY26F-FY28F earnings forecasts by -6.6%, -6.0% and -5.6% respectively, mainly to reflect more conservative assumptions for the Environment division amid prolonged geopolitical uncertainties, logistics disruptions and weaker margin assumptions within the UAE operations. We also factor in slower project execution moving forward, although earnings are expected to remain supported by the Facilities, Engineering and Rail divisions.
Valuation. We maintain our BUY recommendation with a lower TP of RM0.65 (from RM0.69), based on 9x P/E multiple applied to revised FY27F EPS of 7.3 sen (from 7.7 sen), supported by a three-star ESG rating. While near-term earnings visibility for the Environment division remains affected by ongoing geopolitical and logistics-related disruptions in the Middle East, we believe AWC’s diversified earnings base and healthy RM865m orderbook continue to provide earnings resilience. Meanwhile, the Group’s recurring concession-based income and improving execution momentum within the Engineering and Rail divisions should continue to support earnings resilience.
Risks. Prolonged weakness in the Middle East affecting the Environment division’s project execution and margins, weaker orderbook replenishment, and inability to sustain margin resilience across the Engineering and Rail divisions.
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| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 3.949723 | 3.981539 |
| EUR | 4.614340 | 4.619218 |
| CNY | 0.585739 | 0.586367 |
| HKD | 0.504357 | 0.507919 |
| SGD | 3.092670 | 3.114543 |