KJTS: Strategic Partnership Bolsters Future Growth, Undervalued Stock Receives ‘Buy’ Recommendation

A recent strategic collaboration is poised to significantly expand tender opportunities and market reach for a company specializing in cooling solutions and facilities management. Following this development, an investment bank has reiterated its “BUY” recommendation, highlighting a disconnect between the company’s robust operational performance and its current share price, suggesting a compelling “value buy” opportunity.

Strategic Collaboration Details

The company’s wholly-owned subsidiary, KJ Technical Services Sdn Bhd (KJTS SB), has entered a two-year collaboration agreement with China Construction Yangtze River (Malaysia) Sdn Bhd (CCYRM). This partnership aims to jointly identify, bid for, and execute data centre and infrastructure/building projects. The focus will span Malaysia and selected international markets, including Cambodia, Thailand, Singapore, and Turkey. Under the agreement, KJTS SB will spearhead the design of cooling & heating systems, energy management, and facilities management, potentially including capital expenditure participation. CCYRM will manage civil, structural, and architectural works, alongside overall project coordination, with a mutual exclusivity clause for projects pursued.

Outlook and Market Impact

Analysts from Malacca Securities view this collaboration as a strategic move to broaden the company’s tender book, particularly in the niche of water-cooling services, and facilitate its maiden entry into new geographic markets. While the partnership is expected to open significant growth avenues, analysts note that earnings assumptions currently remain unchanged. This is due to the expectation of no immediate cash outlay in the near term and the scarcity of detailed financial information regarding potential projects. The positive impact is therefore seen as a longer-term catalyst.

Valuation and Recommendation

Despite the promising outlook from the collaboration, the company’s share price has experienced a notable correction without any underlying deterioration in its business fundamentals. On the contrary, operationally, the company is demonstrating strength, evidenced by recent successes in the data centre sector. Malacca Securities maintains its “BUY” recommendation with a target price of RM2.00, based on a P/E multiple of 45x pegged to FY26F EPS of 4.44 sen. This valuation implies a substantial capital upside of 143.9% from the last traded price of RM0.82, underscoring the analyst’s belief that the current market valuation presents a strong “value buy” opportunity for investors.