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KJTS: Strategic Acquisition Lapse Adjusts Future Outlook, ‘Buy’ Rating Affirmed
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A previously proposed acquisition by KJTS Group Berhad, involving a share purchase agreement with Malakoff Utilities, has lapsed following the expiry of its extended long-stop date. The announcement, made on February 5, 2026, details the refund of the full deposit of approximately RM44.4 million to KJ Technical Services within five business days, with both parties having no further claims.
Management has indicated that the lapse is not expected to materially impact the company’s earnings per share or net assets per share. KJTS Group Berhad has yet to determine the revised use of the substantial proceeds originally allocated for the acquisition. Further announcements and, if required, shareholder approval regarding these plans are anticipated.
Performance Review & Strategic Adjustments
Prior to this development, the company’s earnings growth thesis was significantly anchored on the MUSB acquisition, which included an exclusive 153MW electricity supply deal and a district cooling plant in KL Sentral, projected to yield at least RM10 million in annual profit after retrofit, and marking a strategic entry into the public sector’s RM5 billion total addressable market. Management had previously guided that these deployments were expected to materially impact earnings starting this year.
However, analysts believe a recent collaboration with CCYRM (details currently limited) is likely to provide a buffer for the company to at least partially fill the earnings gap created by the acquisition’s lapse.
Future Outlook & Valuation
Consequently, financial forecasts for FY26-27f have been trimmed by 34.6% and 22.9% respectively, adjusting projected PATMI.
Despite these adjustments, the investment bank maintains its BUY recommendation, noting a revised target price. This valuation is based on a 30x P/E multiple applied to the FY26F EPS of 2.91 sen. The assigned P/E reflects a 30% premium to selected local solar peers, justified by KJTS’s recurring revenue model, which is expected to effectively de-risk earnings volatility.
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