PETALING JAYA: The ongoing hot and dry weather phenomenon El Nino will put further pressure on the efficiency of Malaysia’s energy, water and other utilities’ infrastructure requirements moving forward, says CIMB Research.
In a note to clients, the brokerage firm said the El Nino’s impact is becoming more evident, raising electricity demand for cooling and increasing water stress in the country.
Going into 2027, CIMB Research said El Nino could amplify Malaysia’s heat and water stress.
The World Meteorological Organisation sees a 100% probability of El Nino persisting into early 2027, while MetMalaysia expects the event to peak in March to May 2027, raising the risk of hotter, drier conditions. This could further lift cooling demand and pressure already-stretched water resources, CIMB Research noted.
Malaysia’s water system also has little room for inefficiency, with non-revenue water (NRW) still at 37.1% in 2024. More than one-third of treated water is lost before reaching paying customers, while the RM2.5bil National NRW Programme and RM1.7bil 13th Malaysia Plan pipe-replacement programme provide a sizeable funding pool to address ageing networks.
According to CIMB Research, the bigger opportunity is structural, with El Nino acting as an incremental catalyst.
Meanwhile, Malaysia’s infrastructure pressures are intensifying, with peak power demand projected to reach 33.5 gigawatts by 2035, with buildings accounting for about 30% of energy consumption, and around 37% of treated water lost through NRW as at 2024.
Together with rising water demand, tariff reform, and government-led infrastructure upgrades, this should accelerate adoption of energy and water-efficiency solutions.
While El Nino brings renewed attention to these issues, CIMB Research said “We view energy and water efficiency as structural themes supported by Malaysia’s underlying infrastructure needs.”
It prefers KJTS Group Bhd
and Insights Analytics Bhd as “direct plays on these demand-side efficiency trends”.
Within its coverage universe, the brokerage said KJTS offers direct exposure to cooling energy requirements through its cooling energy and energy efficiency solutions, with the cooling energy segment accounted for around 77.9% of the group’s revenue in the second quarter of 2026.
Insights Analytics, meanwhile, provides direct exposure to the water security and NRW theme through digital water solutions spanning leak detection, pressure management, smart metering, and intelligent asset management.
“We believe both companies are well positioned to benefit from sustained investment in more efficient energy and water infrastructure, with El Nino providing an additional near-term catalyst,” CIMB Research added.
