• Company profile . Tex Cycle Group is involved in the business of scheduled waste management. It provides waste recovery and recycling services, and rental of recycled products within various manufacturing industries, such as electronics, engineering, automobile, oil & gas and printing industries. Tex Cycle is licensed to treat 31 out of 77 type of waste regulated in the country, such as rags, wiper cloths and gloves. Tex Cycle has over 4,000 customers nationwide, comprising local MNCs.

• Expansion in the region & new power plant project . Texcycle is looking into overseas expansion on the waste management within the ASEAN region. Besides, a power purchase agreement with Tenaga Nasional Berhad was signed on 2 nd Feb 2017 at a fixed tariff rate of RM0.4766 per kWh to supply 2MW per hour of electricity to Tenaga Nasional Berhad, which will be commencing no later than 28 th Jan 2018 for 16 years. The electrical energy power plant (still in the process of construction) will have an installed capacity of 2.5MW per hour.

• Technical outlook. Texcycle has trended sideways over the past six months within the range of RM1.00-RM1.20. Following the recent release in quarterly results, volumes have picked up with price gapping up towards RM1.23. The Stochastics oscillator is oversold, while the RSI is turning upwards; indicating that the momentum could be turning positive over the near term. Monitor for a breakout above the SMA200 (RM1.16) level, targeting the RM1.22 and RM1.35 levels, followed by the LT technical target of RM1.47. Support will be pegged around RM1.08 and RM1.02, while cut loss at RM1.00.

Source: Hong Leong Investment Bank Research - 16 Mar 2017