By looking at the announcement, their managing director Dato Ahmad Kabeer had been accumulating AWC from September 2015 to October 2015, exactly after the contract expired on 31 August 2015. He had acquired 4,461,000 shares with the average price of around 0.380. Mr Tan Siew Kheng and Mdm Soo Chow Mei also disposed their shares, but not to worry as the number of shares are not much. Another possible reason Dato Ahmad Kabeer is collecting might be because of the acquisition of Qudotech SB (plumbing industry) and DD Techniche SB for the Engineering Division. 

Qudotech had been a premium plumber in the construction industry whereby it had undertaken many plumbing jobs for the high rise buildings. As for DDT, it is one of the four players involved in the selling and distributing of Rainwater Harvesting Components and Products (RHCP). When we mention there are only 4 players, meaning to say the competition is lessor. DDT designs, sells and installs the RHCPs for the buildings. The Federal Government had gazetted a law requiring the incorporation of Rainwater Harvesting Systems in all the relevant buildings. 6 states in Malaysia had incorporated the requirements of RHCP under the local council laws. DDT is well poised to take advantage of the increased implementation of these laws[3]. Lets assume another few states will be implementing on this, AWC will definitely benefit from there. Both Qudotech and DDT will provide a collective profit guarantee of RM3.9 million per annum for 2 financial years ending 30 June 2017. So roughly in FY2016 and 2017, we will notice the additional RM1.8 million for each years. In April 2015, AWC undertook the Xiamen University Project in Dengkil, Selangor for all the air conditioning works and recently they accepted the award for air conditioning for Capital 21 project in Johor and will commence in the last quarter of 2015.

The biggest contribution coming from the Environment Division. AWC secured several projects locally and internationally (Singapore, Hong Kong, Middle East) with their STREAM AWCS system. A thing to note here is, they had diversified their income base to recurring income by securing the Operations and Maintenance for the majority of their projects. AWC needed to ensure their systems continue to run efficiently and cost effectively well into the future, and i think that since they are the only company doing that business, the clients will not hesitate to have them as their maintenance contractor.

To calculate the possible Target Price for AWC in 2016, by considering the RM1.8 million from the new subsidiaries:

a) Net Profit for 2016: Average of 3 years 2013, 2014 and 2015 = RM6,500k + RM1,800k = RM8,300k.

b) The number of shares remain the same (following the 2015 Annual Report) = 225,352k shares

c) Average PE for 3 years: 12, lets take a range from 12 to 15

d) Target Price = PE (12 - 15) x EPS (8,300k / 225,352k) = ranging from 0.44 to 0.52

So our Target Price will be around 0.44 to 0.52, hmm, seems achievable. (Just a rough guide with plenty assumptions made).

As for chart wise, there is a double bottom breakout at 0.38. I also notice there is a cup with handle at around 0.38 and 0.39. The chart is moving just nice, today even though the market is dropping, same goes to AWC. But it rebounded once it touch the middle band 0.395. With Dato Kabeer expecting good results 

Let's Ride the Wind and Gainvest

Gainvestor 10sai

11 November 2015

10.55pm

Sources:

[1]: http://www.awc.com.my/index.php/about

[2]: http://www.stream-environment.com/