PETALING JAYA: AWC Bhd
’s recently announced corporate proposals are expected to strengthen its capital structure and enable the group to secure higher-value projects and support growth.
Apex Securities Research is “mildly positive” on the corporate proposals.
It said the exercises are expected to dilute AWC’s financial year 2026 (FY26) earnings per share (EPS) by 28.2% on a fully diluted basis, resulting in a fair value of 66 sen.
On a pro forma basis, these exercises are expected to improve AWC’s gearing ratio from 0.42 times as of June 30, to 0.28 times, it added.
It is keeping its earnings forecasts unchanged at this juncture, pending completion of the proposed exercises.
The research house is also maintaining its “buy” recommendation with an unchanged target price of 92 sen a share based on nine times FY26 EPS of 10.2 sen.
The research house liked AWC for its leading AWS system market share (90% in Malaysia, 40% in Singapore), predictable cash flows from both concessionaire and non-concessionaire segments.
It has promising growth prospects from untapped projects in Abu Dhabi, which collectively represented a potential RM1bil order book, according to the research house.
The risks cited for its call include failure to secure improved rates for government concession contracts under the integrated facilities management segment.
It also includes slower-than-expected order replenishment in the environment segment, and potential delays in mega infrastructure projects that could weigh on rail segment prospects.
AWC has proposed a bonus issue of free warrants, a new Employee Share Option Scheme (Esos), and a share buy-back of up to 10% of its issued shares.
The proceeds of up to RM78mil from the warrants and RM34mil from the Esos will be used to strengthen its capital base and enhance funding flexibility across the engineering, environmental, and facilities-management divisions.
The exercise of these warrants is expected to provide additional working capital to fund business expansion.
All proposals are expected to be completed by the first quarter of 2026, subject to shareholders’ and regulatory approvals.
The indicative exercise price is 93 sen per warrant and 68 sen per Esos option.
