PETALING JAYA: KJTS Group Bhd
’s near-term outlook remains anchored by stronger funding capacity and a wider project pipeline after the entry of Retirement Fund (Inc) or KWAP into its district cooling joint venture (JV).
According to Kenanga Research, the move will materially strengthen the group’s long-term recurring earnings profile.
The research house maintained its “outperform” call and RM1.37 target price, arguing that the revised structure lifts KJTS’ strategic value despite no immediate earnings upgrade.
The key development is the amended JV under Lestari Cooling Energy Sdn Bhd, where Stonepeak now holds 60%, KWAP 30% and KJTS 10%, compared with the earlier 90:10 split between Stonepeak and KJTS.
Kenanga Research described the restructuring as positive because KWAP’s entry as a 30% shareholder in the Lestari Cooling JV significantly expands the platform’s addressable market and funding flexibility.
KWAP is committing up to RM190mil for its stake, implying a total equity valuation of RM630mil.
Based on a 30:70 equity-to-debt project structure, this translates into potential project funding capacity of RM2.1bil, exceeding the previous RM1.6bil baseline.
A major shift is that the JV is no longer capped at RM1.5bil and up to one-third of the fund can now be deployed outside Malaysia, opening room for regional expansion.
The research house believes this enlarged capacity could be fully utilised, given KWAP’s mandate to allocate RM20bil into transition assets by 2030 and align its portfolio with net-zero ambitions by 2050.
As technical partner, KJTS stands to secure engineering, procurement, construction and commissioning (EPCC) jobs as well as long-term operations and maintenance income tied to chilled water concession assets.
This supports earnings visibility beyond one-off project wins.
Kenanga Research left forecasts unchanged pending clearer visibility on project rollout, but still expects core net profit to rise to RM22.6mil in FY26 and RM28mil in FY27, underpinned by stronger EPCC contribution and concession-linked recurring income.
Risks remain tied to project delays, concession execution and policy changes in energy efficiency incentives.
