RHB Research has maintained its BUY call on JHM Consolidation Bhd and raised its target price to 73 sen from 64 sen, implying 22% upside, as stronger utilisation, semiconductor-related orders and new automotive programmes support an earnings recovery.
The research house said management has raised FY26 revenue growth guidance to more than 30%, alongside higher margin assumptions. RHB consequently lifted its FY26-FY28 earnings forecasts by 12%, 13% and 10%, respectively.
Its revised target price is based on an unchanged 18 times price-to-earnings multiple, or one standard deviation above JHM’s five-year mean.
RHB said sheet metal remains a key profit contributor, with management guiding for another 10% to 20% growth in FY27. Semiconductor equipment demand also remains healthy, with an outstanding order book of about RM55 million, while the machining segment has secured another RM10 million of orders.
Order visibility extends across six months of confirmed work and a further six months of forecast demand, with some programmes running into FY27.
JHM is also expanding its facility by about 20,000 sq ft, or roughly 10% additional space, with completion targeted in 4Q26. The expansion will accommodate new assembly and finishing capabilities, including surface treatment and painting.
Management estimates current capacity can support RM110 million to RM120 million in sales, compared with the present RM80 million to RM90 million run-rate.
Automotive, which contributes about 60% of group revenue, is expected to provide a multi-year earnings base.
RHB said a lighting module programme for North American markets has entered mass production after earlier delays, while JHM has also secured two Proton Advanced Modular Architecture programmes worth about RM90 million annually.
The programmes cover headlamps, rear combination lamps and tailgate modules and typically run for five to seven years.
Meanwhile, the 52%-owned JHM-Dekai joint venture remains loss-making, but RHB expects it to improve as Proton volumes ramp up from 3Q26. Higher volumes, automation, localisation and overhead rationalisation are expected to support margins.
JHM is expected to spend about RM30 million in capital expenditure across FY26 and FY27 on land, plant development and capacity expansion.
RHB said the group’s key growth drivers over FY26-FY27 include semiconductor- and hard disk drive-related sheet metal and machining work, a full-year contribution from JHM-Dekai, ramp-up of Proton programmes, and new assembly and integrated head unit projects.
The research house said stronger operating leverage and the potential turnaround of loss-making subsidiaries could provide further upside to earnings and margins.
