KUALA LUMPUR (Sept 7): Hotter and drier conditions from El Niño could put greater pressure on Malaysia’s electricity and water systems into 2027, according to CIMB Securities.

The research house said El Niño is expected to persist into early 2027 and peak between March and May, potentially lifting electricity demand for cooling while worsening water shortages.

It said Malaysia is particularly exposed as electricity demand is already rising, while about 37% of treated water is lost through non-revenue water (NRW).

“Hotter and drier conditions could further strain both systems, strengthening the need for cooling efficiency, water conservation, and better infrastructure management,” CIMB said.

Malaysia’s peak electricity demand is projected to increase to 33.5 gigawatts (GW) by 2035 from 21.3GW in 2026, while data centres could account for 31% of Peninsular Malaysia’s electricity demand by then.

CIMB said hotter weather could further increase cooling demand across commercial buildings, industrial facilities and data centres, adding to the country’s underlying electricity load growth.

On the water side, Malaysia’s NRW rate remained high at 37.1% in 2024, meaning more than one-third of treated water was lost before reaching consumers. The losses are estimated to cost more than RM2 billion annually.

Water stress is already visible in some areas, with two of the 49 dams monitored nationwide at critical levels as at Aug 31, namely the Muda Dam in Kedah and Sungai Pagar Dam in Labuan.

CIMB said the government’s RM2.5 billion National NRW Programme and RM1.7 billion allocation under the 13th Malaysia Plan to replace about 1,800km of critical water pipes should support efforts to improve water efficiency.

The research house named KJTS Group Bhd (KL:KJTS) and Insights Analytics Bhd (KL:IAB) as its preferred beneficiaries of the theme.

KJTS offers direct exposure to rising cooling demand through its cooling energy and energy-efficiency businesses, while Insights Analytics provides digital water solutions including leak detection, pressure management and smart metering.

CIMB maintained “buy” calls on both companies, with target prices of RM1.35 for KJTS and RM1.95 for Insights Analytics.