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Wednesday, July 15, 2015

JHM - The Shining Of High Brightness LED

JHM Consolidation Berhad (0127) is listed in my 40 good fundamental stocks picks on 05/07/2015, and shared in my telegram group, because of several simple reason. And today I am very happy because its start meletup !! Why we should continue put more focus into this company?
 
JHM currently focused on the design, development and provision of the following categories of MECs:-

(a) Components related to High Brightness Light Emitting Diode (“HB LED”);
(b) Fine pitch connector pins
(c) Other electronics component

Anything special about this company? Yes, the increasing demand of LED is the main reason to kick this company to move to recent new high. 

Lets look at the price movement first. 


Ever since the IPO price at around 0.40-0.45 year 2006, it move to highest around 0.63 and unluckily face the storm of 2007-2008 financial crisis and hit this company badly in their profit and recent years slowly recover back and this year will be their brightest shining year of 2015.  

This can be assured by looking at annual report 2014, chairman statement viewing on financial year 2015 outlook. 

Without explaining much on that sentence mean, we look closer to fundamental data. 

In year 2006 when they first listing, their annually net profit is standing at about 5.845 Million. EPS 6.06 cent. Estimated that time shares issues is around 96.45 Million. As of today, JHM total shares have increased to 123.00 Million, which still consider little. Why I highlighted this so much? Its important to see the potential of "MELETUP" and comparison with other similar sector, similar size of company.


As you can see, JHM and MMSV have many similarities, both are doing LED related and both have little shares inssued, and most probably JHM might outshine MMSV in futures because the shares issues is much lesser than MMSV !! PENTA also have many similarities as well ! 


Lets back to some calculation: 

Previous quarter result of JHM show flying record after so many years of struggles, now with the rising demand of LED, JHM finally have good result. Do not forget that in year 2006, JHM annual profit is 5.845 Million. In year 2015 single quarter, its have 1.571 Million. 


So what does it mean? Since today the price actions, the chairman confidence, tell us below:

With projections of profit for coming quarter result maintain at average only, 
 (however chairman think it will do better)

Year 2015

First quarter (May 2015) 1.571 Million profit = 1.45 EPS
Second quarter (August 2015) 1.5 Million profit =  1.21 EPS (projected)
Thirds quarter (November 2015) 1.5 Million profit = 1.21 EPS (projected)
Fourth quarter (Fedruary 2015) 1.5 Million profit = 1.21 EPS (projected)

Adding up of full year EPS = 5.08 EPS Its almost closed to IPO 2006 EPS 6.06. 

By calculate simple PE 

5.08 EPS x 10 = 0.508
5.08 EPS x 15 = 0.762
5.08 EPS x 20 = 1.016 !!

Peers such as MMSV are trading at PE 10.77 rolling 4 quarter, PENTA at PE 14.60.

Therefore I would say that JHM should trading at above PE 10 which is at least above 0.50 !  

What if the result is much better than first quarter !? It will meletup just like what MMSV and PENTA did!! 

As a Conclusion:

1. JHM is another very classic LED related company that will outshine in Bursa Stock Market. 
2. Its obvious that coming quarter result will be good by looking at today price movement.
3. Its have UMA, DNA, most of the stock that call for UMA have extra ordinary power. 
4. Based on simple PE calculation, JHM still cheap and its will fly high. 
5. JHM shares issues is very little, therefore it will definitely move up !
6. In the month of big sell down in June, JHM did not shy away at all.
7. Its time heading to previous new high RM 0.63 without any doubt. 
8. Today I walk into lighting shop, and the salesman tell me choose LED ! Save energy ! 

My First TP 0.50, Second TP 0.63, Third TP 1.0. 

Selamat Hari Raya Aidilfitri YEAR 2015 

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