Summary

• Earnings surprise. KJTS posted 2Q26 core PATMI of RM8.1m (+75.4% QoQ, +79.3% YoY), lifting 1H26 core PATMI to RM12.7m (+45.2% YoY). The results exceeded expectations, accounting for 63.4%/61.0% of our/consensus FY26f earnings forecasts of RM20.0m/RM20.8m, respectively. The positive variance was mainly driven by stronger-than-expected revenue recognition from the Energy Services segment following the commencement of recently secured contracts.
• QoQ. Revenue surged 57.7% to RM88.2m, driven by a 95.7% increase in Energy Services revenue to RM68.7m following the commencement of recently secured contracts. This more than offset a 6.2% decline in Integrated Facilities Management revenue to RM19.5m following the expiry of several cleaning services contracts. PBT and core PATMI consequently rose 79.1% and 75.4%, respectively, supported by new Energy Services contracts carrying higher gross profit margins, despite higher administrative expenses. PBT and core PATMI margins improved by 1.6 ppts and 1.0 ppt, respectively.
• YoY. Revenue more than doubled to RM88.2m, driven mainly by stronger Energy Services contributions, which accounted for 77.9% of Group revenue versus 55.3% in 2Q25. PBT surged 110.4%, supported by higher gross profit contributions from new Energy Services contracts with relatively higher contract values. Core PATMI rose 79.3% despite a higher ETR of 24.3% versus 15.4% in 2Q25.
• YTD. 1H26 revenue expanded 59.0% to RM144.1m, while PBT rose at a faster 75.9% to RM17.7m, reflecting the increasing contribution from the Energy Services segment, which accounted for 72.0% of Group revenue versus 56.5% in 1H25. Core PATMI rose 45.2% to RM12.7m, with earnings growth moderated by a higher ETR of 26.3% versus 12.6% in 1H25.
• Outlook. We continue to like KJTS, underpinned by tailwinds such as (i) structural demand for energy-efficient cooling infrastructure from Malaysia’s energy transition policy, (ii) MIDA's RM92.8bn of approved investments including RM34.6bn across data centre and cloud-computing projects which suggests forward demand visibility, and (iii) the iHandal acquisition, which broadens KJTS’ energy-services platform into heat-recovery solutions while creating cross-selling opportunities and supporting the expansion of its recurring income base.

Valuation & Recommendation

• Forecast. Maintained. Despite the earnings beat, we make no changes to our FY26f–27f earnings forecasts at this juncture, pending further guidance from the upcoming results briefing.
• Valuation under review; maintain TP of RM0.87 for now. We retain our TP of RM0.87 at this juncture, pending further clarity from the upcoming results briefing on the sustainability of the stronger earnings momentum, contract recognition profile and medium-term earnings outlook. Given the stronger-than-expected 1H26 performance, we believe there is scope to revisit both our earnings assumptions and valuation base following the briefing.
• Downside risks. Risks to our recommendation include: (i) KJTS’s inability to replenish its orderbook; (ii) changes in TNB’s tariff policies; and (iii) potential contract terminations from its customers.