CIMB Investment Bank Bhd (CIMB Securities) has maintained its BUY call on KJTS Group Bhd, raising its target price to RM1.45 from RM1.30, citing the company's joint venture (JV) with Stonepeak Partners LP as a key growth catalyst.

The research house believes this JV will provide KJTS with a strong financial platform to expand its footprint in Malaysia's cooling infrastructure sector, with committed funding of up to RM1.5 billion.

KJTS has entered into an agreement with Stonepeak, a global alternative investment firm with approximately US$72 billion in assets under management, to develop, upgrade, invest in, and own cooling infrastructure assets. Stonepeak will hold a 90% stake in the JV, while KJTS will retain the remaining 10%. Under the partnership, KJTS will be responsible for asset identification and acquisition, as well as undertaking all engineering, procurement, and construction (EPC) and operations and maintenance (O&M) activities.

CIMB Securities views this development positively, highlighting that the JV positions KJTS to benefit from Malaysia's increasing focus on energy efficiency, particularly in cooling energy. Government initiatives such as the Energy Efficiency and Conservation Act (EECA) 2024 and the Green Technology Master Plan 2021–2030 are expected to drive significant investments into the sector, creating opportunities for KJTS to secure new contracts and enhance its revenue stream.

With the JV targeting up to RM1.5 billion in investments, CIMB Securities estimated that KJTS may need to contribute up to RM30 million, assuming an 80:20 debt-to-equity capital structure. Given KJTS's net cash position of RM63.2 million as of end-FY24, CIMB Securities believes the company is well-positioned to meet its funding requirements with minimal gearing. Furthermore, the planned acquisition of Malakoff Utilities Sdn Bhd (MUSB), expected to be completed by the second quarter of 2025, will further strengthen KJTS's market presence in the cooling energy segment.

The JV is anticipated to unlock new growth avenues for KJTS, enabling it to pursue more capital-intensive projects and acquire earnings-accretive cooling assets that generate long-term recurring income. CIMB Securities noted that the company's role as the JV's EPC and O&M contractor will drive demand for its cooling energy services, which contributed 47.4% of KJTS's revenue in FY24.

While the exact earnings contribution from the JV remains uncertain due to the lack of deployment details, CIMB Securities conducted a case study based on KJTS's recent RM65.5 million acquisition of MUSB. They estimate that if the JV acquires assets with a similar financial profile, it could potentially generate up to RM141 million in core net profit, approximately 3.5 times KJTS's FY26 forecasted core net profit. This estimate excludes additional profits from KJTS's 10% equity stake in the JV.