AWC Berhad FY26 Core Earnings Hit RM20.1m

AWC Berhad‘s FY26 core profit after tax hit RM20.1 million, slightly exceeding Malacca Securities’ forecast of RM19.3m and consensus expectations of RM19.9m, according to the research house published on 27 August 2026. While reported PAT of RM26.4m (+6.2% YoY) looked stronger, this included a one-off RM6.4m recovery of previously impaired trade receivables from the Engineering division, which Malacca Securities stripped out to arrive at the core figure.

Fourth quarter FY26 revenue surged to a record RM126.5 million (+21.2% YoY), the highest-ever quarterly top-line for the group. This broad-based strength came from all four operating divisions: Rail jumped 79.9% YoY, Environment rose 18.4% YoY, Engineering grew 9.4% YoY, and Facilities expanded 8.6% YoY.

What AWC Does and Where It Makes Money

AWC operates four main divisions: Engineering (which handles mechanical and plumbing work including data centre infrastructure), Rail (railway systems and infrastructure), Environment (waste management and environmental services, particularly in the Middle East), and Facilities (facility management and maintenance services). The Engineering division was the standout performer in FY26, with revenue jumping 24.8% YoY to RM107.7m and profit before tax more than doubling to RM15.2m from RM6.9m.

According to Malacca Securities, the Engineering division’s plumbing segment has carved out a compelling foothold in data centre infrastructure, securing its third data centre subcontract within 12 months (RM23.1m in August 2026). Management flagged data centre expansion as a key structural growth driver, with both Engineering and Facilities divisions actively chasing opportunities in this high-margin space.

The Middle East Headwind That Won’t Go Away

The Environment division painted a different picture, with profit before tax contracting 28.8% YoY to RM16.2m amid geopolitical-related project delays in the Middle East. However, the research house noted a silver lining: 4QFY26 showed improvement, with revenue up 21.3% QoQ and 18.4% YoY, driven by higher project progress billings in Malaysia and Singapore.

For the full year, FY26 revenue of RM445.5m rose 7.6% YoY from RM414.1m, but core PAT declined 19.3% from RM24.9m to RM20.1m year-on-year. The headline softness masked divergent divisional trajectories—the data centre boom offset the Middle East slowdown.

Order Book and Valuation: Where Malacca Securities Sees Growth

Malacca Securities’ constructive view rests on AWC’s outstanding order book of RM847.4m (including the August 2026 data centre contract), which translates into 1.9x FY26 revenue and provides solid earnings visibility into FY27. The research house has maintained its core PAT forecasts of RM25.2m–27.8m for FY27 and FY28 respectively.

The BUY rating with a RM0.59 target price is underpinned by a 10.0x P/E multiple applied to Malacca Securities’ FY27 fully-diluted EPS forecast of 5.90 sen. This implies upside from current levels for investors who believe the data centre tailwind will offset Middle East delays. The company also proposed a final dividend of 0.75 sen per share, bringing total FY26 dividends to 1.25 sen per share with a payout ratio of 15.9%.

What This Means for Retail Investors

AWC’s earnings trajectory hinges on two competing forces: the accelerating data centre infrastructure boom in Malaysia and Singapore, versus persistent geopolitical headwinds in the Middle East. The FY26 core earnings beat suggests the company can navigate complexity without stumbling, though the Environment division’s contraction is a tangible risk.

For retail investors tracking the engineering and infrastructure space, the 1.9x order-book-to-revenue ratio provides some downside protection, as management has already locked in work. The data centre play is a genuine structural catalyst—not a one-time bump—given the region’s AI and cloud infrastructure buildout. However, concentration in the Middle East exposure remains a material vulnerability if geopolitical tensions persist.

The 15.9% dividend payout ratio suggests management expects to reinvest earnings, which could fund data centre growth but also means dividend growth may lag near-term. Full details are available in Malacca Securities’ research report published on M+ Online.

Key Takeaways

• Core earnings of RM20.1m beat forecasts: Malacca Securities’ estimate was RM19.3m; consensus was RM19.9m. Reported PAT of RM26.4m included a RM6.4m one-off receivables recovery.
• Data centre is accelerating: Three subcontracts in 12 months; Management flagged this as a key structural growth driver across Engineering and Facilities divisions.
• Middle East weakness offsets group growth: Environment division PBT down 28.8% YoY; however, 4QFY26 showed improving momentum in Malaysia and Singapore operations.
• Strong order book visibility: RM847.4m outstanding order book equals 1.9x FY26 revenue, underpinning Malacca Securities’ constructive FY27 outlook.
• Malacca Securities maintains BUY at RM0.59: Based on 10.0x FY27 P/E applied to 5.90 sen fully-diluted EPS forecast; risks include government concession renewal and further Middle East delays.

Disclaimer: This article is for informational and educational purposes only and does not constitute financial advice or a recommendation to buy or sell any security. Ratings and target prices cited are those of Malacca Securities Research and are subject to change. Always do your own research before making investment decisions.

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