Malacca Securities Initiates Coverage On KJTS And Raises Valuation
Malacca Securities has initiated coverage on KJTS Group Berhad (KJTS) with a BUY call and a target price of RM1.90, implying a potential upside of 21.8% from its current price of RM1.56.
Founded in 1984, KJTS is a leading provider of integrated building support services, specialising in large-scale centralised cooling energy systems across both greenfield and brownfield projects. The company also operates in facilities management and cleaning services.
Malacca Securities projects a robust 54.2% earnings CAGR between FY2025 and FY2027, underpinned by:
- New contract wins in its core cooling energy segment;
- The strategic acquisition of Malakoff Utilities Sdn Bhd (MUSB), which enhances recurring income streams;
- Supportive government initiatives such as the National Energy Transition Roadmap (NETR) and the New Industrial Master Plan (NIMP);
- Rising demand for data centres in Malaysia, boosted by foreign direct investments from global tech giants.
KJTS derives about 75% of its revenue from long-term recurring contracts spanning 5 to 20 years, providing strong earnings visibility. Its unique model of offering upfront CapEx in exchange for fixed fees throughout the contract period has been highlighted as a differentiator in the industry.
The MUSB acquisition is expected to deliver an annuity income of RM8–10 million per annum post-retrofit, while its joint venture with StonePeak positions KJTS to undertake larger, high-capital projects worth up to RM1.5 billion.
Malaysia’s ambition to become a regional data centre hub further strengthens KJTS’s growth prospects, with the company already securing contracts at Sedenak Tech Park and in Selangor.
From an ESG perspective, KJTS is also seen as a key proxy to the global energy efficiency drive. Between 2017 and 2024, its projects reduced approximately 68,000 MWh of electricity consumption and cut around 52,000 metric tonnes of CO₂ emissions.
Financially, the group reported a 14.9% YoY revenue growth in FY2024 to RM137.8 million, with net profit reaching RM8.3 million. Earnings are expected to climb significantly, with net profit forecast at RM29.1 million in FY2026, driven by higher-margin recurring income.
“While KJTS trades at a premium valuation of 45x FY2026F EPS, we believe it is justified given its strong growth trajectory, solid earnings visibility, and strategic positioning in energy-efficient solutions,” Malacca Securities said.
