KUALA LUMPUR: AWC Bhd sees great potential demand for its STREAM automated waste collection system (AWCS) overseas, especially in countries with lots of new development coming up such as India and the United Arab Emirates (UAE).
The STREAM system installation and maintenance unit forms the group’s environment division via its 51%-owned Nexaldes Sdn Bhd. The segment typically contributes about 30% and 40% of group revenue and net profit per year respectively.
AWC’s two other divisions are engineering and facilities which contribute 31% and 39% of revenue respectively, and 12% and 48% of profit respectively.
In an interview with The Edge Financial Daily, AWC chief financial officer (CFO) Randy Chitty (pic) said the overseas market contributes about 69% of the group’s revenue for the financial year ended June 30, 2016 (FY16).
The group reported RM17.13 million in net profit for FY16, more than double the RM8.08 million recorded in the previous year. Revenue for the year also doubled to RM248.53 million from RM128.02 million a year earlier.
“Malaysia is a significant contributor to our revenue, but the other two markets — Singapore and Abu Dhabi, UAE — are also quite strong. We also sometimes get projects in India and Taiwan, but contributions are still very small from these two countries,” said Randy.
In FY2016, the UAE was the biggest contributor of 36% of group revenue, followed by Malaysia (31%), Singapore (23%) and Hong Kong (10%).
One of the group’s biggest overseas installations of its STREAM system is at Al Raha Beach for Aldar Properties in Abu Dhabi, where the group has already installed some 12km of piping.
“We have a captive market there as our systems are installed in full, underground, for the east wing of the development.
“Therefore, whenever a building is constructed at the site, they will have to appoint us for plot works to link up the building with the existing infrastructure underground,” said Randy.
He explained that the installation of a single typical high-rise building could cost approximately RM1.8 million, but said the incremental cost to extend the system to other buildings would be lower as the infrastructure only requires one vacuum to cater for a radius of 2.5km.
AWC managing director and group chief executive officer Datuk Ahmad Kabeer Mohamed Nagoor said Abu Dhabi has the potential to be one of the major contributors for its overseas operations going forward.
“There are also more developments coming up in Abu Dhabi, so there are opportunities for us to participate in more greenfield projects there,” he said.
He also noted the potential in India for STREAM, where the group is doing installation for a smart city in the Delhi Mumbai Industrial Corridor project.
“The Indian government is supposed to build over 90 smart cities, and they have built four or five so far. The one we are doing for is maybe the fifth, so obviously there is big market potential in India as well,” said Ahmad Kabeer.
Elsewhere, the group also has a presence in Taiwan via the RM7.8 million contract for a new inflight catering facility in Taoyuan International and Singapore via the installation of STREAM at Changi General Hospital.
Randy said that the group is actively looking for contracts in Malaysia, Singapore and Abu Dhabi.
“Sometimes we would also get an odd enquiry here or there, where we will entertain and negotiate and see whether something comes out of it. That’s what happened with India and Taiwan,” he said.
AWC is currently tendering for RM150 million worth of jobs under the environment division out of its total tender book of RM600 million. The balance of the tender book is divided between its facility division (RM300 million) and engineering division (RM150 million).
Its current order book stands at RM1.2 billion, which will keep the group occupied for the next 10 years, and provides a good view for earnings going forward. The group intends to deliver about half of its order book within FY17 and FY18.
“Even though we have a significant order book, we are cautiously optimistic due to the current challenging business environment out there. As we go along we will need to replenish our order book.
“We have secured about RM1 billion worth of contracts last year, which was exceptional, and we have been and will be concentrating on the delivery of these contracts,” said Ahmad Kabeer, adding that the group is hoping to sustain its financial performance in FY17.
Yesterday, the group announced that it had been awarded a subcontract worth RM14.645 million from Sunway Construction Sdn Bhd for the supply, delivery, installation, testing, commissioning and maintenance of fire protection services for a project in Putrajaya.
AWC closed unchanged at RM1.05 yesterday with a market capitalisation of RM271.47 million.