JHM Consolidation Bhd

Brightening outlook

• A key player in the Electronics Manufacturing Services (EMS) space in Malaysia for the manufacturing and assembly of surface mount technology and PCBA assembly for LED lighting modules.

• Stronger demand for automotive and industrial sector as global economy gradually re-opens in recent months bolster recovery prospects.

• Submitted the proposal to transfer to Main Board of Bursa Malaysia, expected to be completed by end-2020 may garner further institutional support. Technically, short-term trendline breakout above RM1.69 may propel share price higher towards the next resistances at RM1.88-RM2.00 with long term target at RM2.20.

Trading Catalyst

• JHM Consolidation Bhd (JHM) is regarded as one of the key players in the Electronics Manufacturing Services (EMS) space in Malaysia for the manufacturing and assembly of surface mount technology and PCBA assembly for LED lighting modules.

• We like JHM for its sound fundamentals with the ability to weather the uncertainty from Covid-19 as the group remain in the profitability region in 2QFY20. We are sanguine on the recovery prospects as seen in the stronger demand for automotive and industrial sector as global economy gradually re-open in recent months.

• Meanwhile, we note that JHM has submitted the proposal to transfer to Main Board of Bursa Malaysia at end-June 2020. The transfer of listing that is expected to be completed by end-2020 and may garner further institutional support while we also note that brief emergence of substantial shareholder; Oversea-Chinese Banking Corporation Ltd in July 2020 (before parking off some of their stakes in mid-August 2020 to lock in gains) is a testament to the group’s strong financial track record and bright outlook.

Technical Outlook

• Technically, share price has staged a pullback since early-August 2020 before finding some support around the daily EMA60. A short-term trendline breakout RM1.69 may propel share price higher towards the next resistances at RM1.88- RM2.00 with long term target at RM2.20. Support is pegged at RM1.57 and cut loss is located at RM1.56.

Source: Mplus Research - 1 Sept 2020