• Company profile. JAG Berhad, being one of a few companies in the country with a full recovery category of waste recycling license, is involved in the recycling and manufacturing activities of extraction, production and refinery of ferrous, non-ferrous and precious metals via the recovery and reclamation of industrial and electronic waste (e-Waste). It is also engaged in the business of trading ferrous and non-ferrous metals.

• Stronger 1H17 results amid recovering commodity prices. JAG’s business is related mostly to metals such as copper, gold, silver, iron ore and aluminum. Riding on the recovery of commodity prices, JAG registered a PAT of RM2.5m in 1H17 (vs. RM0.3m in 1HFY16) on the back of higher revenue of RM36.7m (+67% yoy).

• Custom commodities index (FIG1). Uptrend intact position after it rebounded off the 400 points level. As the trend is retesting the 479 zone, the index may be poised for a breakout towards 543.

• Technical outlook. JAG’s share price has retraced from the recent peak of RM0.16 forming a short term consolidation around the RM0.125-0.13 levels. As the MACD Histogram has turned green and with an oversold Stochastics oscillator, we may anticipate the share price to trade slightly higher towards the target of RM0.15-0.165, followed by a LT target of RM0.18. Meanwhile, support will be anchored around RM0.125-0.13 and the cut loss is set around RM0.12.

Source: Hong Leong Investment Bank Research - 8 Sept 2017