AWC vs EMETALL: Analysis on Why AWC Down but EMETAL Up after QR Announcement?

I had been wondering this question, "Why after the company announced a handsome good results, the share price dropped? Doesnt it supposed to go up? And why some ballooned up like no tomorrow?" I guess some of you might be asking the same questions also. After a case study conducted on AWC (7579) and EMETALL (7217), i guess i might have an answer for the question. Most importantly i know how to ride the wind and trade next time.

1. Fundamental Analysis:

Some background on the business model of the company. AWC is a company specialising in quality engineering services. AWC provides total asset management services such as integrated facilities management and engineering services to building owners. AWC is involved in 4 major industries, namely facilities, engineering, environment and investment holding. You can click here to refer to my post on AWC[1]. EMETALL is engaged in manufacture of metalwork and industrial process machinery and equipment. EMETALL had a few subsidiaries; manufacture and distribution of steel products, IT solutions, property sector[2]. I did not go into detail for EMETALL, sorry.

But first, lets go through AWC and EMETALL Quarter Result[3][4]. 

AWC Q3 Result[3]

AWC announced a very good result. If we compare Q3 2016 with Q3 2015, the net profit improved by 901% (RM5,757k vs RM575k). If we compare with Q2 2015, the net profit improved by 54% (RM5,757k vs RM3,747k). This is definitely the result that we want. Double digit growth. Even with 3 quarters in 2016, the net profit had already exceeded the net profit for the whole 2015. With such momentum, the Q4 will continue to blossom with satisfactory results. Not to forget AWC announced a 1.5 cents of special dividend EX on 16 June 2016.

AWC had been steadily growing with an average net profit margin of 4.71% from 2011 to 2015. it is also a net cash company.

AWC: Revenue & Net Profit from 2011 to 2016. 2016 only announced 3 QR[3]

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AWC - AWaCkening~

AWC Berhad is an investment holding company specialising in quality engineering services. AWC provides total asset management services such as integrated facilities management and engineering services to building owners[1]. AWC is involved in 4 major industries, namely facilities, engineering, environment and investment holding. Let's understand the business model of AWC before we go into more in depth details of it.

AWC is the only company who provides solution for Integrated Facilities Management (IFM) in Malaysia. Some examples for IFM, the autopay for parking at the entrance, cleaning housekeeping (pest control), Computerized Maintenance Management System (CMMS), energy and utilities, etc. Basically all new buildings will need the service of IFM in new projects. And AWC is the premier provider of total asset management and provides "one stop" integrated facilities management services. Next, AWC provides integration of key facility systems that manage electrical distribution, lighting, air conditioning and security. Basically, they supply the engineering section for the buildings, for example, civil structural, control systems, heating ventilating and air conditioning system (HVAC), building automation system (BAS), utilities, mechanical and electrical for the building. 

STREAM AWCS (Automated Waste Collection System)

Next, the environment sector. AWC also provides design, engineering and supply of STREAM Automated Waste Collection System (AWCS) to transport municipal solid waste via pipes to a central waste handling facility where it is collected and compacted into sealed containers that are then removed periodically. Basically this STREAM AWCS had resolved 2 major problems about wastes, which are irregular collection schedules of wastes and spillage of wastes from garbage trucks. The AWCS is widely used in a few countries and their projects. Just to name a few projects, In Malaysia (M-Suites Ampang, Lakeville Residence, Iskandar Residence, NU Sentral, KL Sentral, KLIA 2 Integrated Complex) Singapore (Changi General Hospital, Changi Airport Terminal 3 & 4, Resort World Sentosa) United Arab Emirates, Qatar, China and Hong Kong[2]. 

In short, AWC provides a dragon-full-set facilities to the buildings. From the engineering of air conditioner, to the facilities of CCTV security, to the waste management system, AWC integrated all of the facilities, engineering and environmental issues in IFM (Integrated Facilities Management). They are also pioneering into energy conversation. They provides pro-environment solutions, or another word, green environment, which is aligned to the Governments requirement. Even in the first page of their website amazes me, the slogan, TOWARDS SUSTAINABLE GROWTH... Going to Preferred Heights... such ambitious and charismatic slogan...

Summary of AWC Business Model[1]