PETALING JAYA: AWC Bhd
’s growth prospects appear promising as the company positions itself to ride on robust demand for sustainable urban infrastructure projects across Singapore and Malaysia, while expanding its recurring income base through long-term operations and maintenance (O&M) contracts. The company’s outlook remains buoyant, supported by healthy tender activity, new technology adoption, and opportunities arising from regional green-building initiatives.
According to Apex Securities Research, AWC’s tender pipeline remains healthy at around RM100mil, mainly supported by opportunities in Singapore and Malaysia. The brokerage noted that in Singapore, demand for Automated Waste Collection Systems (AWCS) is underpinned by the National Environment Agency’s (NEA) mandate requiring all new Housing and Development Board (HDB) and private developments to install such systems. “In Singapore, demand remains strong under the NEA-mandated rollout of AWCS for all new HDB and private developments, with around 50,000 HDB units scheduled for launch between 2025 and 2027,” it said.
Apex Securities added that AWC’s subsidiary, Stream, is well placed in the hospital segment as well, supported by the government’s Healthier SG infrastructure programme. It highlighted that these hospital projects typically involve multi-pipeline systems and stainless-steel components with stringent hygiene standards, translating into higher margins compared with conventional residential developments.
In Malaysia, growth prospects are driven by the adoption of AWCS in new smart-city and township developments. “In Malaysia, growth is driven by smart-city and township developments in the Klang Valley and Johor, as developers adopt AWCS to meet GreenRE (Green Real Estate) and GBI (Green Building Index) certification standards in line with the country’s energy-transition agenda,” said Apex Securities. It expects these factors to sustain healthy order book replenishment and strengthen margin visibility over the medium term.
Recurring income is also emerging as a major earnings pillar for AWC as more AWCS projects move into their post-completion phase. “Under the build-operate-transfer structure, Stream typically provides two years of O&M services, after which clients commonly extend maintenance contracts with the Group,” said Apex Securities. Each installation, it noted, has a design lifespan of up to 30 years and generally requires one to two servicing cycles annually.
The brokerage estimated that a RM20mil residential project with about 5% of its contract value allocated to O&M could generate around RM500,000 in recurring annual revenue potential post-completion. It added that O&M margins are likely to exceed those of engineering, procurement, construction and commissioning works, as the service-based nature of O&M entails lower material and operating costs. Recurring income currently accounts for about 20% of the segment’s revenue in 2025.
Apex Securities maintained its “buy” call on AWC, with an unchanged target price of 92 sen, citing the group’s leading position in the AWS system market share (90% in Malaysia and 40% in Singapore); predictable cash flows; and promising growth prospects from untapped projects in Abu Dhabi, which could contribute up to RM1bil in potential order book.
