PETALING JAYA: KJTS Group Bhd
expects stronger earnings for the financial year 2026 (FY26) supported by higher contributions from recent contract wins.
It is also confident of securing new contracts in the cooling energy (CE) space through Lestari Energy, its joint venture (JV) with Stonepeak, amid rising demand for energy-efficient solutions in its three key markets namely Malaysia, Thailand and Singapore.
“The traction for CE in Thailand and Singapore is expected to improve, driven by deeper client engagement, favourable national policies (Singapore), and increasing cross-selling opportunities,’’ CIMB Research said in a report.
KJTS is also constructive on its acquisition of a 70.7% stake in iHandal Holdings Sdn Bhd, which comes with a RM3mil per annum profit guarantee for 2026 to 2028, it added.
“We have factored in the RM3mil annual profit guarantee from iHandal for three financial years.
“As a result, we raise our earnings forecasts by 5% for FY26 and 8% for FY27.
“The Thailand operation’s earnings contribution could be potentially double, supported by growing demand for energy-efficient solutions,’’ Kenanga Research noted.
On the Stonepeak partnership, the group indicated that one to two district cooling projects valued between RM100mil and RM150mil each could be secured over the medium term.
The group is also pursuing a RM300mil district cooling opportunity for a major healthcare development in Batu Kawan, which is not factored in Kenanga’s profit forecast numbers.
“We derive a new target price of RM1.37 from RM1.30 a share after factoring in the iHandal acquisition, based on sum-of-parts valuation,’’ Kenanga Research said.
It has maintained an “outperform” call on the stock.
The risks to its call include termination or delay risk from the Stonepeak JV, rollback of the government’s energy efficiency policy, and concession asset termination risk.
“With no surprises from KJTS’ FY25 results briefing, we make no changes to our FY26 to FY28 earnings per share (EPS) estimates, “buy” rating and target price of RM1.10 a share for the company,’’ CIMB Research added.
The research house said its target price is pegged to 25 times the 2027 price-to-earnings ratio, which is about a 20% premium to global CE peers.
“We continue to like KJTS for its positioning as a listed proxy to Malaysia’s National Energy Transition Roadmap (NETR), our projected three-year EPS compounded annual growth rate for KJTS of 20.3%, and its scarcity value as the only NETR-focused energy efficiency pure play on Bursa Malaysia,” CIMB Research added.
The research house also viewed the deal positively, as iHandal’s waste-heat recovery capabilities complement KJTS’s CE franchise, facilitating the group’s expansion from predominantly Cooling-as-a-Service offerings towards broader Energy-as-a-Service solutions.
‘We also see tangible cross-selling optionality (KJTS’s commercial base like malls/hotels and iHandal’s industrial client pool),’’ CIMB Research said.
