PETALING JAYA: KJTS Group Bhd
is expected to strengthen its recurring income base following the signing of four 20-year agreements in Thailand.
The agreements – entered into by KJTS’ Thailand subsidiary KJTN Engineering Company Ltd with subsidiaries of Central Plaza Hotel Public Company Ltd – cover retrofit works, operations and maintenance services and chilled water supply for four hotels.
Kenanga Research said the projects involve approximately RM11mil in retrofit capital expenditure that will be funded by KJTS, with the works expected to be completed by February 2027.
“Total fixed fees amount to about RM48mil over 20 years, or around RM2.4mil annually, excluding variable chilled-water fees,” it said.
KJTS will also receive monthly variable fees based on the amount of chilled water supplied.
Kenanga Research said the agreements are positive as they further strengthen KJTS’ recurring income base, while expanding its energy services footprint in Thailand.
Based on an assumption of a 80:20 debt-to-equity structure and variable fees of 0.14 sen per refrigeration tonne-hour, the research house estimated that the projects could generate a high-single-digit internal rate of return.
It added that KJTS had a relatively low gross gearing ratio of 0.23 times as at June 30, 2026, and should not face major difficulties in securing project financing.
The latest wins also represent another sizeable cooling project secured in Thailand within less than two years of KJTS’ previous award in April 2025.
Kenanga Research said Thailand remains a key growth market for KJTS, supported by rising adoption of energy-efficiency and decarbonisation initiatives across commercial buildings, including hotels and retail properties.
“Given that air-conditioning is typically one of the largest sources of electricity consumption in commercial properties, we believe KJTS remains well positioned to capture further opportunities as building owners seek to lower energy costs and improve operating efficiency,” it said.
Following the new projects, Kenanga Research raised its financial year 2026 (FY26) and FY27 earnings forecasts by 2% and 5%, respectively, with a full-year contribution expected from FY27 once all four systems are operational.
The research house maintained its “outperform” call on the counter and raised the target price to RM1.60 from RM1.57.
