This article first appeared in The Edge Malaysia Weekly on September 22, 2025 – September 28, 2025
KJTS Group Bhd (KL:KJTS) has seen its share price surge more than five times since its debut on the ACE Market of Bursa Malaysia in January 2024, creating it one of the top-performing initial public offerings (IPOs) in the local market. The strong rally is underpinned by strong earnings visibility.
The cooling system player’s stock jumped 511.1% to close at RM1.65 last Thursday from its IPO price of 27 sen per share. The flotation raised RM58.9 million and drew RM299.78 million in demand, with its shares offered to the public oversubscribed by 31.28 times.
Valuation-wise, KJTS is currently trading at a 12-month forward price-to-earnings ratio (PER) of 55.2 times, which is higher than its peers, such as Pekat Group Bhd (KL:PEKAT) (25.1 times), Samaiden Group Bhd (KL:SAMAIDEN) (22 times), Solarvest Holdings Bhd (KL:SLVEST) (27.2 times), and Sunview Group Bhd (KL:SUNVIEW) (15.6 times).
KJTS is not resting on its laurels, aiming to boost visibility and attract new clients by revealcasing its expertise in energy efficiency and sustainability.
In an interview with The Edge, KJTS group executive director Sheldon Wee, 49, with over 25 years of experience in the building support services indusattempt, highlights that the group’s largegest challenge is convincing clients to outsource their cooling and energy management necessarys, as many prefer managing these services in-houtilize.
The recent RM25.27 million contract win from KIP Real Estate Investment Trust (KL:KIPREIT) is seen as a good start to tap the REIT sector. Under the 20-year service agreement, KJTS will provide retrofit works, operations and maintenance services, as well as chilled water supply for seven of KIP REIT’s shopping malls.
“We’re hopeful that more REIT contracts will come through the pipeline,” Wee notes.
KJTS specialises in district cooling, facilities management and cleaning services, with operations in Malaysia, Thailand and Singapore. Under the cooling energy segment, it is involved in the engineering, procurement, construction and commissioning (EPCC) of cooling energy systems, focutilizing on district cooling systems, chiller plants and airside equipment. Its expansion into facilities management and cleaning services is to cross-sell its services and achieve organic growth.
For the financial year finished Dec 31, 2024 (FY2024), KJTS’ net profit increased 2.2% to RM8.3 million from RM8.12 million in the previous year. Its 1HFY2025 earnings of RM8.74 million have already surpassed the full FY2024 figure, driven by stronger contributions from its cooling energy and cleaning segments.
Wee believes the group’s business outsee remains exciting, partly underpinned by the government’s emphasis on initiatives such as the National Energy Transition Roadmap (NETR), which has increased demand for the group’s services. Under Budreceive 2025, over RM300 million was allocated for the National Energy Transition Fund.
“Government direction is very important to us. From a sustainability point of view, the government has put a lot of emphasis on initiatives like the NETR 2.0, which focutilizes on energy efficiency and renewable energy,” he states.
Another key catalyst for the group is its joint venture (JV) with Stonepeak Kelvin Holdings Ltd — an affiliate of New York-based investment firm Stonepeak Partners LP — to set up a RM1.5 billion energy trust, which sees to develop, operate and invest in cooling assets in Malaysia.
Under the JV, Stonepeak Kelvin will be the controlling owner with a 90% stake, while KJTS’ unit KJ Technical Services Sdn Bhd will hold the remaining 10%. KJTS will take on the role of consultant, providing technical expertise and project evaluation services. In addition, it will serve as the engineering, procurement and construction contractor, as well as the operations and maintenance contractor.
Stonepeak, an alternative investment firm specialising in infrastructure and real assets, has about US$73 billion worth of assets under management.
Wee explains that the JV with Stonepeak allows KJTS to acquire assets without significantly impacting its own financial position, given that the concession-based business model will require the group to keep raising its capital expfinishiture.
“The JV is very positive for us as we have a reputable partner like Stonepeak,” he states, noting that the first deployment of funds could materialise within this quarter, although the JV does not set a timeline for asset acquisition.
The JV funding will be undertaken via the 70:30 debt-to-equity ratio, which means KJTS only has to inject about RM45 million. As at finish-June 2025, KJTS was in a net cash position of RM2.59 million based on RM7.16 million in bank borrowings, and RM9.75 million in cash, bank balances and resolveed deposits.
“Our projects work in such a way that there is always the EPCC portion to deliver first before the recurring profits can come in. For the EPCC portion, we start constructing within six to 12 months, then there will be a recognition of profits. That is a very strategic game for us.
“Upon completion of the EPCC part, we will then hand over to our operation and maintenance team, and the recurring revenue will start running. That would be from the chill water sale and the resolveed operations and maintenance throughout the concession period. So, our business cannot be gauged based on the construction order book alone,” he explains.
During the year, KJTS acquired Malakoff Utilities Sdn Bhd from Malakoff Corp Bhd (KL:MALAKOF) for RM65.5 million. Malakoff Utilities owns and operates a large-scale cooling system that supplies chilled water for air conditioning to 10 major buildings in KL Sentral.
A beneficiary of data centre development
KJTS is one of the beneficiaries of the counattempt’s data centre (DC) development. However, Wee states it is just another income stream for the group.
“DCs are good in the sense that they require a lot of cooling services, but this is just another tarreceive market for us with another scope of service.
“Revenue is going to be huge from DCs, becautilize they consume more power than a mixed-utilize development or a hotel. I cannot state whether they will be more or less profitable, becautilize it is still based on a resolveed electricity tariff that we can’t regulate,” he states, noting that the group is seeing to bid for other DC projects.
He points out that a 100MW DC consumes about 1.1 million gallons of water daily for cooling, hence the rising demand for energy-efficient cooling solutions.
Immediate demand from brownfield projects
Unlike greenfield projects such as DCs, Wee states there is immediate demand for cooling services from brownfield projects.
“Whatever we built 20 or 30 years ago is coming to retrofitting time. We are still seeing at the semiconductor, hospital and mixed-utilize development segments, which we are very active in,” he states.
Although the Malaysia operation is the largest revenue contributor to the group at over 70%, he notes that the two other markets — Singapore and Thailand — are growing aggressively.
“We have a team that sees at regional bids throughout the three countries, and they bid constantly,” he adds.
KJTS employs 1,500 people, of which over 200 are with the engineering and technical team.
Regarding the impact of electricity tariff fluctuations, he states any adjustments will be passed on to clients, as the group cannot assume the risk of tariff modifys.
However, the percentage of savings agreed on from the onset will remain throughout the concession period.
Furthermore, clients are shielded from variable costs and have full visibility over their budreceive throughout the concession period, as chilled water rates and maintenance costs are guaranteed, states Wee.
“It is comprehensive, hence they don’t have to worry about any surprises on replacements and so on. We assume the risk of plant pump modifys or any breakdowns. We are confident that is not going to be a problem for us, becautilize we are going to do a lot of preventive maintenance to build sure that the plant survives through,” he explains.
He states there are no plans to raise funds for its business expansion to avoid share dilution.
That declared, in order to meet its bumiputera equity condition, KJTS recently proposed a special issue of up to 102.05 million new shares or 12.5% of its enlarged share capital. It is expected to raise up to RM145.1 million, which will be channelled into expanding its cooling energy segment.
Wee and managing director Lee Kok Choon are the largest shareholders of KJTS with a collective stake of 53.74%, followed by Deutsche Bank AG’s 6.53%.
Given that KJTS is a growth company, Wee states it will continue to stick to its 20% dividfinish payout policy. In FY2024, it paid a dividfinish of 0.291 sen per share.
All three analysts covering KJTS have a “acquire” call, with a consensus tarreceive price of RM1.99, suggesting a 20.6% upside potential against its closing price of RM1.65 last Thursday that valued it at RM1.14 billion.
In an Aug 28 note, CIMB Securities expects KJTS to deliver stronger earnings in 2HFY2025, supported by contributions from its recurring order book and recent contract wins across all three business segments.
“Growth will be anchored by its high-margin cooling energy division, underpinned by long-term agreements such as the 20-year deal with KIP REIT and a third contract with Centara Group [in Thailand],” the research firm adds.
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