CIMB Securities has maintained its BUY call on KJTS Group Bhd with a target price of RM1.35, as strong growth in its cooling energy (CE) business and a sizeable project pipeline underpin expectations for stronger earnings in the second half of 2026.
KJTS’s revenue surged 100.1% year-on-year and 57.7% quarter-on-quarter in 2Q26, driven primarily by a 182% jump in cooling energy revenue, which accounted for 77.9% of total revenue during the quarter.
The strong performance offset a 0.8% year-on-year decline in integrated facilities management revenue following the expiry of several contracts.
Cooling energy gross profit margin, however, declined to 24.3%, down 6.2 percentage points year-on-year and 4.7 percentage points quarter-on-quarter, reflecting a higher contribution from lower-margin engineering, procurement, construction and commissioning (EPCC) works.
As new cooling energy EPCC projects commenced during the quarter, non-recurring revenue increased to 67.8% of KJTS’s total revenue.
CIMB expects the recurring income proportion to progressively increase as completed projects transition into longer-term revenue streams from operations and maintenance services, shared-savings arrangements and chilled-water supply.
The recently acquired iHandal Energy Solutions Sdn Bhd (iHSB) also contributed RM600,000 to KJTS’s 2Q26 bottom line following completion of the acquisition in early April.
CIMB expects KJTS to deliver stronger earnings in the second half of 2026, supported by higher recurring cooling energy income, execution of recently secured projects, potential new contract wins and a growing contribution from iHandal from 3Q26 onwards.
Earnings visibility is supported by an outstanding order book of approximately RM560 million as at June 30, 2026.
KJTS has also estimated a potential project pipeline of as much as RM1.6 billion, providing further opportunities for new contract wins in the near term.
CIMB views the company as a key beneficiary of growing adoption of energy-efficiency solutions in Malaysia, alongside improving traction in Thailand and Singapore.
Higher energy costs, deeper engagement with customers and supportive government policies are expected to encourage businesses and building owners to invest in energy-efficiency solutions.
The research house is also positive on KJTS’s expanding range of solutions, which includes cooling energy, iHandal’s waste heat recovery technology and potential wastewater solutions.
These could broaden the group’s Energy-as-a-Service (EaaS) proposition and expand its addressable market.
CIMB added that potential policy measures such as a carbon tax could provide an additional structural catalyst for energy-efficiency investments.
Following KJTS’s 2Q26 results briefing, CIMB made no changes to its FY2026-FY2028 earnings-per-share forecasts, BUY recommendation or RM1.35 target price.
The target price is based on 25 times calendar year 2027 forecast earnings, representing an approximately 10% premium to global cooling energy peers.
CIMB’s positive view is supported by KJTS’s positioning as a listed proxy to the energy-efficiency pillar under Malaysia’s National Energy Transition Roadmap, as well as its projected FY2025-FY2028 EPS compound annual growth rate of 30.9%.
The research house also highlighted the company’s scarcity value as Bursa Malaysia’s only listed pure-play company focused on energy-efficiency solutions.
CIMB expects KJTS to remain a structural beneficiary of increasing investment in energy-efficient buildings and infrastructure across Malaysia and the wider ASEAN region, with its growing recurring-income base providing greater earnings visibility as existing projects move from construction into longer-term operations.
