AWC Bhd may be affected by escalating tensions in the Middle East, Hong Leong Investment Bank warned, flagging potential downside risks to the company’s earnings forecasts.
The conflict’s spillover to Saudi Arabia and the United Arab Emirates—where AWC has operations—could delay project execution, the research house said, increasing the company’s reliance on Malaysia and Singapore for revenue. “Given that Middle East projects generally carry higher margins, this shift is likely to keep group profitability relatively lower,” Hong Leong added.
As a result, Hong Leong downgraded AWC’s stock from ‘buy’ to ‘hold’ and cut its target price by 21 sen to 56 sen, revising down earnings forecasts by 8%–16% for the financial years ending June 2026–2028.
On Wednesday, the stock closed unchanged at 56 sen, after losing nearly 4% earlier in the week. AWC shares have declined almost 38% over the past 12 months, despite record-high jobs on hand, following multiple quarters of missed earnings estimates.
The company currently has only one ‘buy’ call among four analysts, with the remaining three recommending ‘hold.’ The consensus target price is 60 sen, based on Bloomberg’s analyst average.
“While AWC’s strong order book provides revenue visibility, the anticipated slowdown in the Middle East is likely to weigh on near-term profitability,” Hong Leong said. The research house also noted that ongoing geopolitical uncertainty in the region could reduce investor appetite for stocks with direct exposure to the Middle East.
