JST Power Equipment Expands Global Reach with New Transformer Manufacturing Facility in Malaysia

JST Power Equipment has opened a new transformer manufacturing facility in Port Klang, Malaysia, to produce distribution pad mounted transformers. The facility will support production capacity of 700 units in 2025 and increase to 3500 units in 2026. This is JST's ninth manufacturing location globally and will also include dry-type VPI transformers in future production. The facility will serve customers worldwide and increase the company's global footprint.

In a significant development for the defense sector, Prime Minister Mark Carney announced that Canada would meet NATO's 2% defense spending target by fiscal 2025-2026, five years ahead of schedule. This announcement, made on June 9, is expected to have a substantial positive impact on Calian Group (TSXV: CGY), a major defense contractor in Canada.

Ventum Capital Markets analyst Rob Goff maintained his "Buy" rating and $60 target on Calian Group, citing the accelerated defense spending plan as a major near-term catalyst for the company. The $9.3 billion boost in military funding positions Calian to benefit significantly, given its strong exposure to defense, space, and health services. Defense spending represents approximately 49% of Calian's LTM revenues, making it highly sensitive to increases in military expenditures [1].

Goff noted that the government's focus on higher military pay, increased spending with Canadian vendors, and expanded border patrol is particularly noteworthy. This could lead to increased compensation encouraging greater military enrollment, where Calian benefits by providing training and healthcare services. While the exact capacity and pace of government spending are still uncertain, Goff expects the large incremental spending to significantly benefit Calian and its peers.

Calian shares currently trade at 6.7x and 5.8x EV/EBITDA for 2025 and 2026, respectively, or 8.9x and 8.1x based on Goff's $60 price target. Goff's one-year DCF target of $69 per share uses a conservative 13.3% discount rate and an 8.25x terminal EV/EBITDA multiple, implying a 10% free cash flow yield and 3.4% perpetual growth rate. This valuation is considered very attractive by Goff.

Goff expects contract win announcements preceding revenue visibility, supporting his bullish outlook. The analyst remains cautious about the exact capacity and pace of government execution but sees the 2% commitment and NATO's discussion of a 3.5% target as clear catalysts for a value stock in search of momentum.

References:
[1] https://www.cantechletter.com/2025/06/how-will-increased-defense-spending-affect-calian-group/