Data centre momentum is accelerating at AWC Berhad, and Malaysia’s engineering and facilities services group is getting rewarded for it. According to Malacca Securities’ research report published on 9 September 2026, the research house has raised its FY27 and FY28 core profit-after-tax (PAT) forecasts by 10.3% and 5.8% respectively, citing expanding data centre exposure as the primary driver. The company’s FY26 core PAT came in at RM20.1 million, down 19.3% year-on-year but hitting 104.1% of Malacca’s expectations, suggesting execution risk has eased.
What AWC Does and Its Business Segments
AWC Berhad operates across three main divisions: Engineering (subcontracting for MEP systems), Facilities (government and healthcare maintenance), and Environment (infrastructure and waste management). The Engineering segment is where the data centre story unfolds—plumbing and air-conditioning packages for regional data centre builds have created an all-time high order book of RM100.0 million. This is no side bet; management projects steady annual replenishment of RM100.0m–120.0m across FY27 and FY28, anchored by ongoing regional expansion.
The Facilities segment underpins recurring revenue, particularly through government maintenance contracts and hospital support services. Three major healthcare facilities—Hospital Shah Alam, National Cancer Institute Putrajaya, and Hospital Orang Asli Gombak—are expected to contribute RM50.0m–60.0m in FY27 revenue. AWC is also awaiting official confirmation of its government facilities maintenance concession extension, conservatively estimated at ~RM70.0 million for FY27, though no official announcement has been made yet.
Data Centre Subcontracts Drive Upgraded Forecasts
Malacca Securities revised its FY27 core PAT forecast upward to RM27.8 million (from RM25.2m) and FY28 to RM29.4 million (from RM27.8m). The research house also introduced FY29 forecasts as part of this upgrade cycle. These revisions reflect confidence in the engineering division’s earnings quality and replenishment momentum, particularly from data centre plumbing and HVAC systems, which typically command higher margins than general construction work.
The total outstanding order book across all segments stood at RM847.4 million as of the latest update, providing multi-year revenue visibility. The Rail segment contributes RM72.1 million to this order book, with ongoing works like the Prasarana Ampang Line conductor rail replacement keeping the pipeline active. Penang LRT subcontract opportunities are expected to materialize in CY27 when specialized packages for track works, depot equipment, and maintenance systems are tendered.
Strategic Pivot to India Amid Middle East Headwinds
AWC’s Environment division is shifting focus toward India’s smart cities and airport tenders to hedge against persistent Middle East geopolitical delays. The short-to-medium term will rely on Malaysia, Singapore, and India as primary drivers, while the company awaits operational recovery in the Middle East. This diversification move signals management’s pragmatic approach to project execution risk in volatile regions.
According to Malacca Securities, the strategic repositioning is necessary but comes with execution risk. India tender participation is nascent; any earnings contributions remain subject to successful bidding and project kickoff. Domestic execution in Malaysia and Singapore should buffer the Environment division’s base earnings in the interim.
Valuation Basis and Target Price
Malacca Securities derived its RM0.65 target price using a 10.0x price-to-earnings multiple applied to revised FY27 fully-diluted EPS of 6.50 sen. At the time of the report, this implied upside from market levels, though current pricing should be verified independently. The research house maintains a BUY rating on the stock, reflecting conviction in the data centre tailwinds and facilities revenue visibility.
The valuation assumes successful renewal of the facilities concession and uninterrupted hospital support contracts. If either lapses, earnings could compress materially, hence Malacca’s flagging of contract renewal execution as a key risk factor.
What This Means for Retail Investors
AWC’s near-term catalyst is the data centre cycle, which shows no signs of abating across Southeast Asia. High-margin engineering work on HVAC and plumbing offers more predictable returns than legacy construction exposure. However, the story hinges on contract renewals—the facilities concession and hospital maintenance agreements are underpinned by government goodwill rather than competitive tendering, introducing political and bureaucratic timing risk.
The India expansion is a longer-term bet with uncertain timing; expect 12–24 months before material earnings contributions materialize. Rail work from the Penang LRT remains on the horizon but is not imminent. For investors with a 2–3 year horizon, the combination of data centre momentum, recurring facilities revenue, and listed order book visibility offers a reasonable risk-reward profile, provided contract renewals come through as expected.
Key Risks Flagged by Malacca Securities
The research house identifies two material downside risks: failure to renew the government’s concession contract, and continued delays in Middle East project progress. Either scenario could materially dent FY27–FY28 earnings. The concession risk is the more acute near-term concern, as no official extension announcement has been made despite management confidence.
A third implicit risk is execution risk in India tendering. If AWC fails to convert smart cities and airport tenders into awarded contracts, the Environment division’s growth narrative stalls, forcing reliance on sluggish Middle East recovery.
Key Takeaways
- Malacca Securities upgraded FY27 and FY28 core PAT forecasts by 10.3% and 5.8% respectively, to RM27.8m and RM29.4m, citing data centre order book momentum.
- Data centre subcontracts have reached an all-time high order book of RM100.0m, with management guiding RM100.0m–120.0m annual replenishment in FY27–FY28.
- Facilities segment relies on contract renewals: government maintenance concession (~RM70.0m FY27) and hospital services (RM50.0m–60.0m FY27) lack official confirmation.
- Strategic pivot to India smart cities and airport tenders provides longer-term diversification but carries execution and timing uncertainty.
- BUY rating with RM0.65 target price (from RM0.59) assumes 10.0x P/E on revised FY27 EPS of 6.50 sen; downside risks include concession renewal failure and Middle East delays.
This article summarises the research report ‘AWC Berhad — Raising Forecasts as Data Centre Momentum Accelerates’ published by Malacca Securities (M+ Online) on 9 September 2026. For the full report, visit M+ Online. Always conduct your own due diligence before making investment decisions.
Source & Attribution
This article summarises a research report published by Malacca Securities Sdn Bhd (M+ Online) on 09 September 2026. All ratings, target prices and forecasts belong to Malacca Securities Research, not to the author of this blog.
Read the original report: M+ Online Research Report | View full PDF
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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