Briefing Highlights

• Post-results briefing highlights. Following KJTS’ 2Q26 results briefing, management expressed confidence that the strong revenue momentum seen in 2Q26 can be sustained into 2H26, with 3Q26 and 4Q26 revenue potentially matching or exceeding the RM88.2m achieved in 2Q26. This should be supported by continued progress on ongoing EPCC projects, as well as the conversion of completed projects into recurring income.
• Pipeline remains robust. Management highlighted a consolidated pipeline of above RM1.6bn, including c.RM700m of opportunities under the Stonepeak initiative that could be deployed over the next 1-2 years. The Group is also pursuing opportunities across data centres, hospitals and manufacturing, while broadening its offering beyond cooling.

M+ Global View

• 2H26 revenue momentum remains encouraging. Management remains confident that 2H26 revenue can sustain or exceed the RM88.2m achieved in 2Q26, supported by continued EPCC progress across Thailand and Indonesia, alongside projects nearing completion that will transition into recurring income. We believe this provides greater comfort on KJTS’ underlying earnings momentum heading into 2H26, although project timing remains a key consideration.
• Recurring income transition gaining traction. As completed EPCC projects progressively move into O&M, KJTS is building a more visible recurring earnings base while continuing to replenish its project pipeline. Management highlighted several projects nearing this transition, which we expect to provide a supportive earnings bridge into FY27f–28f. We believe the recent Centel wins further demonstrate KJTS’ ability to convert project wins into longer-duration recurring income.
• Medium-term growth runway remains intact. Beyond its existing project pipeline, management’s c.RM700m Stonepeak-related opportunity provides an additional avenue for growth, with one larger project already progressing beyond the ESCO audit stage. While conversion remains subject to project execution and award timing, we believe there is further scope to expand KJTS’ recurring concession and Energy Services portfolio. We also see longer-term optionality from the Group’s move towards Utilities-as-a-Service, particularly across data centre-related energy and water-efficiency solutions.

Valuation & Recommendation

• Forecast. We maintain our FY26f earnings forecast at RM26.6m, while raising our FY27f/FY28f earnings forecasts by 7.3%/7.2% to RM30.4m/RM33.4m, respectively. The revisions reflect improved visibility on the Group’s recurring income pipeline, with management highlighting several projects nearing completion and progressively transitioning from EPCC to O&M. We believe this should support a stronger recurring earnings base in FY27f–28f, while continued project replenishment should sustain growth in Energy Services.
• Reiterate BUY with higher TP of RM1.32. Following the briefing, we have greater conviction in KJTS’ earnings trajectory, underpinned by improved visibility on recurring income conversion and continued replenishment of its Energy Services pipeline. We raise our TP to RM1.32 from RM1.23, based on an unchanged 30x P/E multiple applied to our revised FY27f EPS of 4.41 sen, implying 16.8% upside.
• Downside risks. Risks to our recommendation include: (i) KJTS’s inability to replenish its order book; (ii) changes in TNB’s tariff policies; and (iii) potential contract terminations by its customers.