• AWC’s 4QFY26 core net profit (CNP) surged 70.1% QoQ and 147.6% YoY to RM11.5m, lifting FY26 CNP to RM26.9m (+17.3% YoY), or 110.5% of our full-year forecast and 135.7% of consensus. The results beat expectations, driven by a strong finish across the Engineering and Rail divisions that more than offset continued softness in the Environment division amid Middle East disruptions.
• We make no material changes to our FY27F-FY28F earnings forecasts of RM24.4m and RM27.1m, with earnings underpinned by the Facilities, Engineering and Rail divisions.
• Outstanding orderbook stood at RM824.3m, equivalent to 1.9x FY26 revenue, providing healthy medium-term earnings visibility.
• Maintain BUY with an unchanged TP of RM0.65, based on 9x FY27F EPS of 7.2 sen.
Above expectations. After adjusting for exceptional items (+RM0.7m), AWC’s 4QFY26 core net profit (CNP) came in at RM11.5m (+70.1% QoQ, +147.6% YoY), lifting FY26 CNP to RM26.9m (+17.3% YoY), representing 110.5% of our full-year forecast and 135.7% of consensus estimate. The beat was primarily driven by a strong finish across the Engineering and Rail divisions, which more than offset continued margin softness in the Environment division from ongoing Middle East disruptions.
QoQ. CNP increased by 70.1% to RM11.5m in 4QFY26 (vs RM6.8m in 3QFY26), supported by stronger project execution and order fulfilment activities within the Engineering and Rail divisions. Group revenue increased 9.2% QoQ to RM126.5m, mainly driven by a sharp recovery in Rail segment revenue (+44.1% QoQ) due to higher project deliverables during the quarter under review. Meanwhile, Environment division revenue improved 21.3% QoQ on higher project progress in the Singapore region. This more than offset slightly lower Facilities division revenue (- 2.5% QoQ), while the Engineering division was broadly flat (+1.3% QoQ). Consequently, group PBT margin improved to 12.0% from 7.0% in 3QFY26. Environment’s revenue gain did not fully reach PBT as Middle East margins stayed soft, while Rail’s PBT outpaced its revenue on operating leverage.
YoY. AWC’s 4QFY26 CNP increased 147.6% YoY to RM11.5m, driven by stronger Engineering and Rail segment contribution. Group revenue rose 21.2% YoY to RM126.5m, supported by higher project execution activities and order fulfilment during the quarter. In addition, group PBT margin expanded to 12.0% from 7.4% in 4QFY25, mainly due to stronger profitability within the Engineering and Rail divisions arising from a firmer margin mix.
FY26. For the full year, FY26 revenue grew 7.6% YoY to RM445.5m and CNP rose 17.3% YoY to RM26.9m. PBT growth was led by the Engineering division (+119.0% YoY), with Rail also higher (+5.5% YoY), more than offsetting a weaker Environment division (-28.8% YoY) on softer Middle East margins. Group PBT margin held broadly steady at 7.8% (FY25: 7.7%).
Dividend. AWC declared a DPS of 0.75 sen in 4QFY26 (4QFY25: 0.5 sen), taking full-year FY26 DPS to 1.25 sen, unchanged YoY, for a payout of ~16% and a dividend yield of ~2.1%.
Outlook. We remain cautiously positive on AWC’s medium-term earnings outlook, supported by its RM824.3m outstanding orderbook, equivalent to 1.9x FY26 revenue, providing solid earnings visibility. Facilities remains the key earnings anchor, with the pending renewal of the government CUB concession as the main swing factor. AWC remains the incumbent, while interim extensions provide continuity, although the timing of the long-term renewal remains government-dependent. Engineering is increasingly gaining exposure to data-cententre-related infrastructure, providing a potential structural growth driver beyond traditional air-conditioning and building services. Rail should also benefit from MRT3, LRT3 and other upcoming tenders, supported by a healthy project pipeline. Meanwhile, we remain cautious on Environment (Stream) given its Middle East exposure, although its growing presence in Malaysia and Singapore should provide some diversification.
Earnings Revision. We maintain our FY27F-FY28F earnings forecasts, with CNP of RM24.4m and RM27.1m respectively. While FY26 results came in above our expectations, we will revisit our earnings forecasts following our meeting with management to assess the sustainability of the stronger-than-expected performance.
Valuation. We maintain BUY with an unchanged TP of RM0.65, based on 9x FY27F EPS of 7.2 sen with 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 RM824.3m orderbook continue to provide earnings resilience, supported by the Group’s recurring concession-based income and improving execution momentum within the Engineering and Rail divisions. We will revisit our TP following the management meeting and any subsequent earnings revisions.
Risks. Delay or non-renewal of the government Common User Buildings concession; 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 | 4.009122 | 4.041218 |
| EUR | 4.693152 | 4.697974 |
| CNY | 0.598662 | 0.599280 |
| HKD | 0.511644 | 0.515244 |
| SGD | 3.158149 | 3.180401 |