AWC poised to give out special dividend on strong reserves
PETALING JAYA: Engineering services provider AWC Bhd is in a position to dish out a special dividend, given its strong cash position, said CIMB Research in a report.
The report noted that AWC’s net cash position as at March 2016, which works out to 24 sen per share, is unencumbered and in excess of operational requirements, which gives AWC substantial scope for special dividends, given that it has already locked in concession rates for the next 10 years.
“Our forecast dividend yields of 3.2% to 4.8% excludes any potential special dividends,” the brokerage said in its initiation report.
CIMB Research pointed out that AWC offered investors a well-balanced earnings base of stable and recurring cashflows from its concession business and a fast-growing portfolio of environmental businesses such as STREAM Environment Sdn Bhd, a globally competitive underground waste collection system; Qudotech Sdn Bhd (QDT), a plumbing engineering company; and DD Technique Sdn Bhd (DDT), a rainwater-harvesting systems business.
“STREAM has more than 90% market share in Malaysia while QDT has been highly profitable, as it operates in a very small niche market for high-end and high-rise buildings.
“DDT’s margins have also expanded sharply, as rainwater harvesting systems are increasingly being made mandatory by the government in several states. Both companies were acquired in October 2015,” said CIMB Research.
Apart from that, AWC has been maintaining 37 federal government buildings in the southern region and Sarawak since 1998.
Its RM555mil concession was recently renewed for 10 years at RM52mil per annum for the first five years, which is a 13% increase, with a step-up to RM59mil per annum thereafter.
AWC (7579) - AWC poised to give out special dividend on strong reserves
