Icon8888 Gossips About Stocks
(Icon) JHM Consolidation (3) - Right Smack In The Middle of Industry Sweet Spot
(This is boring....)
(This is cool... To understand why, please read on....)
1. Introduction
JHM first attracted my attention because of its past three quarters good profit. When I wrote Part 1, I knew very little about the company. All the information I have was from public documents.
Forum member Ven Felix later on referred an article posted on The Sun in 2014 to me. Based on the new information, I wrote Part 2 to discuss the group's capex programme and growth plan.
I later learned from Ven Felix that another PLC, D&O Green Technologies Bhd's automotive LED division is doing well.
Based on that lead, I Googled for more information and found something interesting that greatly enhances my understanding of JHM and its market position.
That is how I decided to write Part 3.
2. Automotive LED - The Super Star of LED
In JHM's annual report, the subsidiary (wholly owned) that is involved in Light Emitting Diodes (LED) manufacturing is called Jingheng Electronic Precision Technology Sdn Bhd. The annual report describes it as "Original design manufacturer of High Brightness LED components". This subsidiary is the star performer, it is responsible for the group's recent turn around.
Ok.... "High Brightness"... I can tell from the description that their LEDs produce strong, bright light. But other than that, I can't feel any other thing else (can't smell the money).
As mentioned above, I learned from D&O's quarterly report that its automotive LED division is doing well. Curious, I decided to Google for "automotive LED demand". A few articles turned up. As I moved my mouse down the paragraphs, the smell of money began to come out.
It seemed that among the so many type of LEDs, the automotive LED segment has the best prospects.
When come to automotives, there are actually two types of LEDs.
One type is the Interior LEDs, which are used for lighting up the dashboard and other interior compartments.
The other type is Exterior LEDs, which are used for shining the road. THIS is the type of LEDs that is facing strong demand worldwide and command high profit margin.
What is the main feature of Exterior LEDs ? High Brightness !!!
That is exactly what JHM is involved in !!!
Now we know why JHM is profitable when other LED related manufacturers such as MMSV are not doing so well.
After that Eureka moment, I suddenly realised why the group is investing RM25 mil to set up a production facility in Sungai Petani (please refer to Part 2). According to the Sun Article, "the plant is to cater to rising demand" and "the company was currently in talks with car makers from the US and that prospects for the future were positive".
JHM is investing in a new plant to tap into the fast growing automotive Exterior LEDs segment !!!
3. Information From The Relevant Articles
I have extracted some important points from an article dated 23 December 2015 by industry expert, LEDinside, for your consumption :-
(a) LED manufacturers are branching into the niche application markets as the competition in their industry expands. Currently, entering the automotive LED market is regarded as a blue ocean strategy because the market has relatively few contestants and allows for higher pricing.
(b) According to latest research, the worldwide market value of exterior automotive LEDs for 2015 is expected to reach US$1.21 billion. This figure is projected reach US$2.29 billion in 2020, translating to a compound annual growth rate (CAGR) of 8% during the 2015~2020 period.
(c) Additionally, the market value of standard-power LEDs is gradually declining in contrast to the rapidly rising market value of high-power LEDs. In the future, automotive LED application will take off in the high-power LED market.
(d) Exterior automotive include directional signals, fog lights, headlights (high/low beams) and position lights. The volume of high-power LEDs used for this application has been growing each year. The annual volume increases have also beaten the annual declines in high-power LED prices, thus helping to drive the market value of exterior automotive LEDs to grow at a CAGR of over 8% from 2015 through 2020. The penetration of LED products in the exterior automotive market is currently less than 15%, so the growth potential is huge. High/low beam LEDs in particular will see the highest growth in market value, with CAGR reaching 11% during the 2015~2020 period.
(e) The total LED volume used in the exterior automotive application worldwide has reached 2.79 billion pieces this year and will grow to 3.67 billion pieces in 2020. From 2015 through 2020, the LED volume used in headlights and position lights will grow by a CAGR of over 15%. During the same forecast period, high/low beam LEDs will have the highest CAGR, reaching 23%.
(f) As for interior automotive LEDs, most products on the market still use standard-power LEDs. With the average sales prices of standard-power LEDs in a tailspin, the worldwide market value of interior automotive LEDs is expected to suffer negative growth in the next five years. LEDinside estimates that the market value will reach US$605 million this year but will later drop to US$603 million by 2020.
To read the full article, please click on the link below
http://www.ledinside.com/node/24379
In an older article written by LEDinside, I pick up another piece of interesting information.
"automotive-use LED certification periods are long and the entry barrier for entering the supply chain is high"
It seemed that automotive LEDs is not an industry that anybody can enter as he wishes. You need to be properly certified.
4. Concluding Remarks
(a) Certain readers used to question the motive behind my article series. One speculated that I must have been trapped in the stocks and I need to promote them to offload. I would like to clarify that this is not the case.
I like to write additional articles when I discover new information. It is to slowly build up knoweldge of the companies, one piece at a time. Better understanding leads to better decision making in the future, as simple as that.
(b) Please do not have the impression that the more articles I wrote, the safer it is for you to invest in the stock. My experience so far is mixed. I studied and wrote about Thong Guan extensively, it turned out to be a super star. However, GOB and Johotin disappointed. Gadang so far is doing ok.
There is no direct correlation between the number of articles I wrote and the performance of the stocks. As an arm chair analyst, I face limitation on how accurate my view of the future can be.
(c) Despite the latest set of positive information, I wouldn't recommend you to jump big time into this stock. My personal feeling is still 50% 50%. The overall theme looked interesting, but we need to wait for more details (we can't even tell for sure whether the RM25 mil capex is still on).
No need to rush in. I suggest you keep this stock in your watchlist. Afterall, market sentiment is bad.
Take it easy.
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Discussions
9 people like this. Showing 50 of 81 comments
I have concerns about chin well also
But didn't bother to say it out
Financial Results will determine whether mr Desa can make money, no point for me to bad mouth
2016-01-16 18:46
Desadog u need to try harder
Your punch not strong enough
Eat too much old man egg, I guess
2016-01-16 18:48
I always say....experts should be more careful and diligent. Non experts and young girls can say anything they like as this is a public forum anyone can put in some thing.
2016-01-16 18:49
woah...Proton part supplier can also be redressed by I con as greatest show on Earth....I always say you are great.
2016-01-16 18:50
Desa2020, Simple is that, give us d prove dont copy Rob earth style ; by saying baseless things . If u wish to press down with your cheap saying, we know its not going to work. Give yourself a breath Desa. U r not only insulting i3 forumers here but , u hv totally become. ....
2016-01-16 19:08
felix, I suggest you buy Maybank and stop play play shares.
Not for you.
2016-01-16 19:54
Felix, I lazy to argue with them.
But I think JHM is expanding its business.
2016-01-16 20:15
Better ask I3 to delete all his post. This bluffing Desa2020 very mean trying to spread misleading info here. New readers can easily con by him.
2016-01-16 20:18
If JHM really supply LED lamp to PROTON, is was also a goods for it coming business grow. Coz as I know proton and Suzuki will launching new 3 model car in this year... And this is a good start again for proton to increase they sales in market. Then JHM sure will have new order and can help to growth the profit earnings.
2016-01-16 21:21
Guys , I'm a n to Proton, I hv crop this fromIcon8888 p.3 srticle :-
after that Eureka moment, I suddenly realised why the group is investing RM25 mil to set up a production facility in Sungai Petani (please refer to Part 2). According to the Sun Article, "the plant is to cater to rising demand" and "the company was currently in talks with car makers from the US and that prospects for the future were positive".
2016-01-16 21:41
This $25/ mil capex is to cater potential order from a USA automative player.
2016-01-16 21:44
As I know until today PROTON I never heard about transmission problem. But Volkswagen have even though the car not more than 2 years. Besides tt now our country facing economy crisis, I guess it will be more demand for national car.
2016-01-16 21:45
this stock cannot rush, let it be tested by time.
many stocks that I made money are like that. Poh Huat took 12 months to be re rated from 1.30 to 4.00 (add 0.5 free Warrants)
It was powered by wave after wave of good results, not promotion by anybody
2016-01-16 21:46
if it cannot deliver good result, we will have to accept fact and move on, cannot fight with propaganda... doesn't work that way... market is very intelligent ..
2016-01-16 21:52
that is why I caution everybody not to sai lang.. the journey of discovery has just begun... there are many unknowns...
buy a little bit, don't sai lang...
2016-01-16 21:54
Noted that. It seen very promising, a confirmation a likely to be positive. I hv 2/3 portion ranging from $0.44 - $0.49 . Hehe
2016-01-16 21:57
Frankly speaking, the trend are readily to surge higher. Nxt candlestick for confirmation needed. If a green candle bar forming nxt week, likely a bullish harami will appear.
2016-01-16 22:02
"this stock cannot rush, let it be tested by time.
many stocks that I made money are like that. Poh Huat took 12 months to be re rated from 1.30 to 4.00 (add 0.5 free Warrants)
It was powered by wave after wave of good results, not promotion by anybody"
I learn one more golden rules from Icon8888.
2016-01-16 22:03
LED manufacturer my foot..............they mould the plastic covers for Proton cars headlamps.
Proton parts supplier more accurate.
this Icon truly is amazing story teller....tall tales to be precise.
anyway....the invention of LED by Shuji Nakamura winning him the Nobel Prize is a great story but alas....JHM is not Shuji Nakamura.
2016-01-18 02:20
No other share in Malaysia meh?
Must buy this that is Proton parts supplier, directors says suffers from ringgit weakness, cost inflation, bad 3q results, coming disastrous 4 Q results...
why so hardup to buy share one?. Relax la.
Felix, better still go buy Maybank and dont play play shares.
hahahahaha
2016-01-18 02:30
Icon and his crew..........too bad.
Proton parts supplier , moulding those plastic headlamps also can suddenly become greatest show on earth.
2016-01-18 02:32
directors says suffers from ringgit weakness, cost inflation, bad 3q results, that should be enough to warn you about coming 4 q results.
Malaysia no other share to buy meh? why want to be hero?
2016-01-18 03:04
Welcome Tomm, Pls read their non automotive segment And Automotive segment Profit margin . Automotive segment enjoying most robustly margin and lead to products mix margin to 12% (still improving) ; D&O has similarly scenario. It's not hard to find out. If, u do your study first. Besided, Mmsv are heavily depend on their Led Tester Equipment to reap through margin (whereas, this segment are more ligh assets). I can foresee, D&O and Jhm will be another star amongst the Led industries players.
2016-01-18 03:04
the mesmerising power of Icon...I have to see to believe..........Now I know the power of Icon.
2016-01-18 03:06
Hi ! Desa girl, your uncle k is looking for u. He say wont spank u wor... wahahaha
2016-01-18 03:07
Dont be pussy lar Desa girl, uncke k like u to licKING his ball wor, I know u r proud to render the service rite ???
2016-01-18 03:08
there is the story of the piper and the rats...........all get drown finally. .....the memerising of the Piper and I Con.
see to believe. Learn some thing new every day.
2016-01-18 03:11
too bad, Felix....market got no feelings and no mercy.
you lost/ make mistake, you pay.
2016-01-18 03:29
Icon8888, u got super nose (ability to smell for $$$) ; I love JHM for its $25/ mil venturing into their Automotive -Ext Led diversify program to tap into the 蓝海 策略 the Blue Oceania strategy . My alike Eagle eyes will not let this gem slip out from my portfolio :) Thx Icon8888 bro , for your effort to deliver such hardly discover info.
2016-01-18 03:53
most important, get your money ready.
Posted by ckwan11d > Jan 18, 2016 04:52 AM | Report Abuse
Paper and pen ready.
2016-01-18 04:59
Most heavily dumped counter , expected to sttract some swing traders to reap with Dj bounce back this week.
2016-01-18 11:21
Optimus really on the period of the 50 years old, tot. Hormon miss balancing.
2016-03-11 22:20
. . . . . . . JING HENG MONKEY GEAR UP HIS PLANT, DUE TO THE FOLLOWINGS :-
http://www.palomartechnologies.com/blog/bid/80740/Automotive-Laser-Diodes-Soon-to-Light-Up-the-Road
Several car companies have switched to High-Brightness LEDs (HB LEDs) because these widgets require less energy, offering the possibility of extended vehicle BATTERY life. ( Save it )
> This Cool :)
Some preliminary studies showing an efficient HB LED headlamp system can extend a vehicle’s range by nearly.......................................... six miles (9.5 km).
( Light ! Where you want it on the road and not in opposing driver’s eyes) and light color temperatures can be tailored to enhance night vision. > ( Big like ! )
WITH this so much to offer, there is no way my monkey will keep Zzzz ,,rite ? ~`~` :)
VenFx
460 posts
Posted by VenFx > Mar 11, 2016 10:08 PM | Report Abuse X
Icon8888, the pic inside above article has caught my eyes :)
2016-03-11 22:24
Lousy writing, not even dislocating financial status, keep saying none existence good prospect?.. Got good meh?
2016-04-18 02:47
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Dear I Con....this is not an export counter. You said so yourself.
Posted by Icon8888 > Jan 16, 2016 06:41 PM | Report Abuse
Good point, we should bear in mind this possibility
If they indeed supply to proton, then they deserve to trade at a discount
2016-01-16 18:43