PETALING JAYA: Engineering solutions company JHM Consolidation Bhd
is RHB Research’s top technology pick within the small-cap space, underpinned by an “explosive” rebound in earnings growth, robust revenue momentum, and operating leverage gains.
It said it anticipated a turnaround in its financial performance driven by stronger-than-expected recoveries in both the sheet metal (tech supply chain) and automotive divisions, alongside optimisation of loss-making units within the industrial segment.
This reinforces our view that the worst is firmly behind the group, with the financial year ending Dec 31, 2026 (FY26) shaping up as a growth year, supported by an improving semiconductor backdrop and accelerating momentum in the automotive segment.
RHB Research said the company’s growth visibility is underpinned by new orders from existing customers, incremental contributions from client Magna Autosystems Inc and the RM300mil Proton contract under its joint venture – JHM Dekai Auto Lighting.
“Additional new projects and programmes could further accelerate growth in the industrial segment beyond the current recovery trend, potentially surpassing our FY26 forecasts,” it said.
At 13 times FY27 price to earnings (P/E), its valuation remains attractive – given the growth potential and low market expectations.
RHB Research said its 64 sen target price is based on a target 18 times FY27 P/E, pegged to plus 0.5 standard deviation above the five-year mean to reflect the turnaround trajectory and improved visibility into FY26 and FY27.
At last look, JHM was at 48 sen per share.
RHB Research said the sector’s key downside risks include a softening of electronic sales and consumer demand, unfavourable foreign exchange movements, a slowdown in artificial intelligence-related capital expenditure spending, obsolescence of technology, and intensifying geopolitical conflicts.
It said it expected the technology sector’s momentum to remain intact in the second half of this year, supported by robust supply chain order flows amid elevated AI infrastructure spending, an improving earnings growth trajectory, and positive management guidance.
RHB Research said at current levels, it sees greater upside among the laggards and second-tier names, where earnings recovery and operational improvements are not yet fully reflected in valuations.
“This should make for continued participation in the global technology bull run,” it added.
RHB Research said it expects the outperformance of the Bursa Malaysia Technology Index or KLTEC to continue, as earnings growth is expected to accelerate from the second quarter onwards, supported by robust order book growth trends and loadings amid the industry upcycle.
“Such positive factors would be underpinned by the ongoing global semiconductor upcycle, driven by high-performance computing, power semiconductors, and a recovery in automotive demand,” it said.
It noted that the upcycle is becoming increasingly broad-based, extending beyond the logic and memory segments that dominated the sector over the past two years.
This is reinforced by Malaysia’s electrical and electronic export growth, which surged significantly in the first half of this year.
