JHM to post earnings growth on recovering demand

KUALA LUMPUR: Kenanga Research is expecting JHM Consolidation Bhd to post year-on-year growth on the back of order resumption to pre-Covid-19 levels.

"Demand from the automotive led segment continues to remain strong, in tandem with rise in global automotive sales due to pent-up demand from heightened consumer spending.

"In line with management’s optimism, we expect the automotive segment to see 25% YoY order growth from its existing customers alone," it said in a note.

It added that there are two to three more new prospects still at the qualification phase, which could further boost order growth.

"The group has also recently passed the virtual audit by a new customer (with sizable market share) which we have yet to factor in any contribution," said Kenanga.

Meanwhile, JHM is also seeing enouraging orders from its existing customers as well as 5G products for the industrial segment, which could translate into conservative 20% growth for the segment.

With regards to its joint venture with MASS Precision, the group has secured a 66,000 sq ft plant with a state-of-the-art robotics production line to produce front-end semiconductor equipment, with delivery expected to begin in July 2021.

The research house maintained its FY21 and FY22 net profit forecasts of RM49.8mil and RM56.7mil respectively.

It reiterated its "market perform" recommendation with an unchanged target price of RM2.35 based on FY21 price-earnings ratio of 26x, representing plus-one standard deviation from the three-year mean.
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