JHM Consolidation Berhad: In-Depth Analysis of Proposed Renewal of Shareholders’ Mandate and Corporate Developments

Key Highlights for Investors

• Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions (RRPTs): JHM Consolidation Berhad (“JHM” or “the Company”) is seeking shareholder approval at its 21st Annual General Meeting (AGM) for the renewal of its existing mandate to enter into RRPTs of a revenue or trading nature, primarily involving its joint venture with Jiangsu Dekai Auto Parts Co. Ltd.
• Material Acquisition: JHM completed a significant property acquisition in March 2025, which may impact its asset base and future operations.
• No Outstanding Litigation: As of the latest practicable date, JHM Group is not involved in any material litigation, claims, or arbitration that could affect its business or financial position.
• Compliance and Governance: Robust procedures are in place to ensure RRPTs are conducted at arm’s length and are not detrimental to minority shareholders.

Details of the Proposed Renewal of Shareholders’ Mandate

The Company is proposing to renew its mandate to allow JHM Group to enter into RRPTs with Related Parties, a move that is designed to streamline business operations and avoid the need for repeated shareholder approvals for transactions that occur in the normal course of business. This mandate will be up for renewal at the 21st AGM scheduled for 26 May 2026.

Key Transaction Partner and Estimated Values

• Principal Related Party: Jiangsu Dekai Auto Parts Co. Ltd., through JHM Dekai Auto Lighting Sdn. Bhd. (52% owned by JHM and 48% by Jiangxi Dekai Auto Lighting Co., Ltd., which is in turn wholly owned by Jiangsu Dekai Auto Parts Co. Ltd.).
• Nature of Transactions: Purchase of tooling, assembly components/parts, and sub-assembly parts by JHM Dekai from Jiangsu Dekai Auto Parts Co. Ltd.
• Estimated Aggregate Value:
  • Previous Circular (2025): RM60 million
  • Actual Value Transacted (May 2025 – LPD): RM17.5 million
  • Estimate for Upcoming Mandate Period: RM100 million
• Relationship Structure: The key individuals behind Jiangsu Dekai Auto Parts Co. Ltd. are Mr. Dai Shiwei (50%), Mr. Cheng Xiaobing (25%), and Mr. Lin Xilong (25%), who are deemed major shareholders of JHM Dekai.

Governance and Safeguards for Shareholders

• All RRPTs are subject to annual renewal and are disclosed in the annual report if they meet specific value thresholds.
• Interested directors, major shareholders, and persons connected to them are prohibited from voting on the RRPT resolutions.
• Transactions are required to be at arm’s length and on normal commercial terms—not more favourable to related parties than to the public.
• The Audit Committee reviews all RRPTs at least quarterly, and procedures are in place to ensure proper documentation and benchmarking against third-party transactions where feasible.
• If any RRPT exceeds the estimated value disclosed in the circular by 10% or more, an immediate announcement must be made to Bursa Securities.

Material Developments That May Affect Share Value

1. Significant Transaction Value Increase

The estimated aggregate value of RRPTs with Jiangsu Dekai Auto Parts Co. Ltd. is set to rise sharply—from RM60 million (previous estimate) to RM100 million for the next mandate period. This sizeable increase signals a substantial ramp-up in business activity with this related party, which could translate to higher revenue or improved economies of scale for JHM Group. Investors should note that such a large volume of transactions with a single related party may also increase risk exposure, making the transaction terms and compliance procedures especially critical.

2. Material Asset Acquisition

JHM acquired an industrial property in Kedah for RM20.9 million, with the deal completed in March 2025. This acquisition could impact the Group’s net assets, future expansion plans, and operational capabilities, and may be relevant for investors evaluating the Group’s asset base and its potential for future growth or diversification.

3. No Outstanding Litigation or Claims

As of the latest practicable date, JHM Group has confirmed it is not engaged in any litigation, claims, or arbitration with a material effect on its financial position or business. This clarity provides reassurance to investors about the absence of major legal risks.

Rationale and Benefits for the Mandate Renewal

• Operational Efficiency: The RRPT mandate allows the Group to conduct necessary, time-sensitive day-to-day transactions without repeated shareholder approval, reducing costs and administrative burdens.
• Strategic Partnership: The collaboration with Jiangsu Dekai Auto Parts Co. Ltd. is expected to enhance speed and quality of communication and enable tailored solutions for OEM clients like Proton, potentially leading to long-term contracts and deeper supply chain integration.
• No Material Impact on Share Capital: The renewal of the mandate is not expected to materially affect the share capital, net assets, gearing, earnings per share (EPS), or the shareholdings of substantial shareholders.

Shareholding and Voting Matters

The principal related parties (Jiangsu Dekai Auto Parts Co. Ltd., Jiangxi Dekai Auto Lighting Co., Ltd., and their major shareholders) do not hold shares in JHM and are not connected to any JHM directors or major shareholders. However, as a matter of governance, they and their connected persons will abstain from voting on the relevant resolution at the upcoming AGM.

Shareholders are strongly advised to read the full circular and consider its implications before voting on the resolution at the 21st AGM.

Availability of Documents for Inspection

Key documents, including the Company’s Constitution, audited financial statements for the last two years, latest quarterly results, and material contracts, are available for inspection at the registered office until the date of the 21st AGM.

Conclusion

The renewal of the shareholders’ mandate for RRPTs, particularly with the steep increase in estimated transaction volumes and the completion of a material asset acquisition, is highly relevant for investors. These developments have the potential to influence JHM’s revenue streams, operational scale, and overall business prospects. However, investors should also be mindful of the risks associated with increased related party exposure and ensure the Group’s governance practices remain robust.

Disclaimer: This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Investors are advised to conduct their own due diligence and consult with licensed financial advisors before making investment decisions. The information contained herein is based on publicly available documents and may not reflect the most recent corporate developments or market conditions.

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