Newsbreak

• AWC Berhad announced that its indirect wholly-owned subsidiary, Stream Industries Sdn Bhd (STREAM), has on 28 September 2026 entered into two agreements with Gujarat International Finance Tec-City Company Limited for a combined contract sum of RM13.1m. The contracts entail supplying Automated Waste Collection System (AWCS) connections for developments in the Domestic Tariff Area (DTA) for RM8.4m and Special Economic Zone (SEZ) for RM4.7m within GIFT City in Gandhinagar, Gujarat, India. Both contracts carry a duration of 36 months from the Notice to Commence. To facilitate local operations, STREAM is incorporating a legal entity in India, to which the agreements will subsequently be novated.

M+ Global View

• We view this contract win positively, as it directly validates management's strategy highlighted during the recent 4QFY26 post-briefing note, to pivot its Environment division toward public infrastructure and smart city developments in India. Securing AWCS project in GIFT City establishes a vital execution track record in the region, serving as an operational hedge against ongoing project delays in the Middle East while complementing core regional markets in Malaysia and Singapore.
• Executed over a 36-month tenure, the project translates to an annualized top-line contribution of ~RM4.4m. Assuming a conservative NP margin of 8.0%–10.0% for environmental engineering turnkey works, the contracts are expected to contribute approximately RM1.1m–RM1.3m in cumulative net profit (~RM0.35m–RM0.44m per annum) across FY27f–FY29f.

Valuation & Recommendation               

• Forecast. As this contract win falls within our order book replenishment assumptions for the Environment division, we maintain our core PAT forecasts for FY27f–FY29f.
• Maintain BUY with a higher TP of RM0.80. We maintain our BUY recommendation with a higher TP of RM0.80 (from RM0.65), based on a higher P/E multiple of 12.0x (from 10.0x) pegged to our mid-FY28f fully diluted EPS of 6.69 sen. The valuation re-rating reflects improving earnings visibility, underpinned by a record RM100.0m Engineering order book, largely driven by DC-related contract wins, together with the India AWCS contract, which validates the Group’s regional expansion strategy and provides greater geographic diversification against ongoing Middle East project delays. Improved trading liquidity since early September further supports a narrowing of the stock’s historical liquidity discount. Concurrently, we roll forward our valuation base from FY27f to mid-FY28f as part of our annual report update.
• Downside risks. Risks to our recommendation include (i) failure to renew the government’s concession contract and (ii) continued delays in Middle East project progress.