Expired Malakoff Utilities SPA Weighs on KJTS Outlook, Earnings Forecasts Cut
PETALING JAYA: The expiry of the share sale agreement (SPA) involving the disposal of Malakoff Utilities Sdn. Bhd. (MUSB) to KJTS Group Bhd. (KJTS) has been viewed as a negative development for KJTS’s growth outlook.
The development follows earlier expectations by CIMB Securities, which had projected the completion of the acquisition in the first quarter of FY2026.
Analyst Walter Aw Lik Hsin said previous forecasts had factored in contributions from engineering, procurement, construction and commissioning (EPCC) upgrade works at MUSB’s district cooling facilities.
These were expected to be recognised between the second and third quarters of FY2026.
“As a result, earnings per share (EPS) forecasts for FY2026 to FY2028 have been revised downwards by between 6.1 per cent and 38.2 per cent.
“This reflects the removal of previously anticipated contributions, including EPCC income, MUSB’s operating earnings and scale efficiencies,” he said in a research note.
SPA Expired After Conditions Not Met
In a filing to Bursa Malaysia on February 4, Malakoff Corporation Bhd. announced that the SPA had lapsed after the failure to meet certain conditions precedent by the long-stop date of February 3, 2026.
Two key conditions were reportedly unmet, and Malakoff opted not to extend the compliance period.
KJTS had announced in February 2025 its intention to acquire MUSB for RM65.5 million.
MUSB is the exclusive electricity supplier to KL Sentral and operates a district cooling plant supplying chilled water to 10 buildings within the development.
Target Price Cut, Positive View Maintained
Following the earnings revision, CIMB Securities lowered KJTS’s target price to RM1.00 from RM1.65.
The valuation is based on a projected 2027 price-to-earnings (P/E) ratio of 25 times, representing a premium of about 20 per cent over global peers in the cooling energy sector.
Despite the earnings downgrade, the research house maintained its positive stance on KJTS.
It highlighted the group’s position as the only listed pure-play energy efficiency company aligned with Malaysia’s National Energy Transition Roadmap (NETR).
This is further supported by a projected three-year EPS compound annual growth rate of 22.5 per cent.
Potential new contract wins and value-accretive cooling energy acquisitions could also serve as future catalysts, although these are not yet reflected in current forecasts.
-wilayah.com.my
