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Tuesday, August 23, 2016

AWC poised to ride on IoT wave

Monday, 22 August 2016
AWC poised to ride on IoT wave
BY TOH KAR INN

PETALING JAYA: AWC Bhd is positioning itself to take advantage of the next wave of growth spurred by the Internet of Things (IoT).

The engineering and facility services provider will also build up its talent management and improve productivity to seize the opportunities arising from the influx in high-rise buildings and the Trans-Pacific Partnership Agreement.

Chief executive officer Datuk Ahmad Kabeer Mohamed Nagoor said AWC’s current order book stood at RM1.2bil, of which RM500mil contracts would help sustain the company for the next two financial years from 2017 to 2018.

With a sustainable recurring income, the group is focusing on managing cost efficiencies.

He told StarBiz that the group would focus on nurturing and acquiring talents.

“We have to take technology into account and see how we can integrate and enhance it further in our platforms.

“In the next five to 10 years, the convergence of Rapid KL and mass rapid transit lines with high rise buildings in the Greater KL region will require sophistication in terms of Integrated Facility Management (IFM), IoT and digitalisation.

“We must be prepared to face the market at that point in time,” said Ahmad Kabeer.

Citing Bandar Malaysia development as an example, he said that AWC should be at the forefront of its capabilities by the time construction of the buildings are completed.

AWC reported revenue of RM75.33mil and net profit of RM5.76mil for its third quarter ended March 2016.

For its cumulative nine-month earnings, AWC registered revenue of RM173.34mil and net profit of RM10.76mil, an increase of 84% and 92.5% respectively, as compared with the corresponding period last year.

“As for our fourth quarter results, we hope to match last quarter’s figures,” said Ahmad Kabeer.

The company’s three core businesses are facilities, environment and engineering, contributing 40%, 31% and 29% respectively, to the group’s revenue.

AWC manages facilities under concessions, healthcare industry as well as commercial buildings.

Concessions continue to make up bulk of AWC’s facility management segment, with its latest concession procurement being the 10-year contract renewal for the maintenance and support services of government buildings.

The renewal of its concession is worth RM555mil, for relevant government buildings in Malacca, Negri Sembilan, Johor and Sarawak.

Apart from concessions, there are two types of contracts that the group takes on, namely maintenance contracts for its facility management division and construction-based contracts for its environment and engineering divisions.

The contracts have an average duration of two to three years.

While its facility management under the healthcare industry is a relatively new segment, AWC believed that it could further tap into the market.

The group is a total solutions provider, as besides IFM, it also offers waste management services under its environment segment, and plumbing under the engineering division.

AWC has already undertaken several Stream Automated Waste Collection System (Stream AWCS) projects in Abu Dhabi, Hong Kong and Singapore.

Not only did AWC implement Stream AWCS in the Changi general hospital in Singapore, it had added a waste and laundry collection system to one of the buildings as well.

“The 300-bed Shah Alam Hospital maintenance sub-contract secured in February this year is our headstart in the healthcare sector.

“Whether we can secure more jobs in the healthcare sectorwill depend on the outcomes of tender bids, which we will participate in.

“Of course there is also a larger market out there – private hospitals,

“It is a very competitive field but we will definitely want to be there, which is why we are preparing ourselves now,” said Ahmad Kabeer.

Prior to the Shah Alam hospital, AWC was involved in maintenance works of the Cheras rehabilitation hospital and all state government clinics in Johor.

Apart from the healthcare sector, AWC manages food waste from airline catering businesses.

The Stream AWCS technology has been implemented at the Cathay Pacific Catering Centre in Hong Kong.

AWC is also growing its rain water harvesting business which has big potential in line with the number of high rise buildings in Kuala Lumpur and the adoption of green building practices.

AWC’s peer is UEM Edgenta Bhd, which operates in similar landscapes.

UEM Edgenta is currently trading at a price-earnings multiple (P/E) of 16.42 times, while AWC is trading at a P/E of 16.32 times.

However, the only similar segment that both companies have is healthcare.

UEM Edgenta’s healthcare building contracts are under the purview of the Health Ministry, while AWC’s Shah Alam Hospital contract is under the purview of Works Department.

Most contracts for the maintenance of government hospital are usually packaged in concessions.

AWC secured the Shah Alam hospital contract under an ordinary tender bid that was not part of a concession.

The company aims to further expand its environment related services internationally, while other segments will focus on the domestic front.

“Stream AWCS is a homegrown global brand and we would like to see our engineering and facility divisions to move in the same direction.

“But for now, we will focus on expanding our domestic reach for engineering and facility,” said Ahmad Kabeer.

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