Initiation: OUTPERFORM | Target Price: RM2.12 | Current Price: RM1.32
Analyst: Nigel Ng | Kenanga Research
KEY HIGHLIGHTS
1. RM14b Energy Efficiency Wave
With Malaysia’s regulatory shift under the National Energy Transition Roadmap (NETR) and Energy Efficiency and Conservation Act (EECA), the market for energy-efficient cooling solutions is poised to expand significantly. KJTS is the only listed pure-play in this space, positioning it to ride the structural uptrend by offering recurring income models via cooling-as-a-service and performance-guaranteed solutions.
2. Undervalued RM1.5b JV with Stonepeak
KJTS owns a 10% stake in a strategic JV with Stonepeak (USD3.3b Asia Infrastructure Fund). With a capital-light 70:30 debt-equity model, KJTS only needs to invest RM45m to unlock RM1.5b worth of cooling energy projects across Asia. The JV enhances KJTS’s ability to scale up high-capex projects, while securing long-term recurring income at mid-teens IRR. Stonepeak’s full upside flows through KJTS’s EPCC and recurring services.
3. Strategic Acquisition of MUSB
The acquisition of MUSB, a government legacy cooling asset, provides KJTS with a 5-fold increase in post-retrofit PAT. With guaranteed electricity supply and a KL Sentral district cooling system, the RM145.4m deal (valued at 9x PE) positions KJTS to be a strong contender in securing further public sector cooling projects.
FINANCIAL FORECAST & GROWTH
FY25F–FY26F Earnings Drivers:
· Higher EPCC order book of RM40m–RM150m/year (mainly from Stonepeak)
· Three new concession contracts (~RM15m recurring annual income)
· Maiden RM3.5m contribution from MUSB in FY26
Projected Earnings (Kenanga estimates):
· FY25F Net Profit: RM14.9m
· FY26F Net Profit: RM33.1m
· Core Net Profit CAGR (FY24–FY26): ~82.8%
VALUATION
Target Price: RM2.12 based on:
· 16x PER for EPCC segment
· DCF valuation for concession assets
· RM965.3m potential from Stonepeak
The SoP valuation yields an asset value of RM1.46b, with re-rating potential if more government projects are secured.
INVESTMENT MERITS
· Strong recurring income model via energy-as-a-service
· Attractive long-term upside from Stonepeak JV (project IRR ~10–12%)
· Scalable with low capital outlay (RM45m unlocks RM1.5b project value)
· High growth visibility from both private and public cooling infrastructure
· Net gearing remains conservative (0.3x in FY26F)
CONCLUSION
KJTS is well-positioned to capitalise on Malaysia’s energy efficiency push, with a unique proposition as a listed pure-play in cooling infrastructure. Backed by a high-growth JV and strategic government asset, its recurring income base is set to scale significantly. Kenanga initiates coverage with an OUTPERFORM call and TP of RM2.12, implying a 61% upside.
