1) Commodities Boom (Copper up 60% from pre-covid level)

Inflation is here to stay as we see the major commodities that JAG has been dealing with were reaching new highs. Companies around the world are battling supply chain bottlenecks as a post-pandemic spike in demand converges with industrial production struggling to catch up after lengthy Covid-induced shutdowns. Earnings for commodities related players like JAG are expected to outperform on yoy basis to benefit from the high inflationary period.

2) Venturing into Renewable Energy
The company has been exploring to tap into the hypergrowing renewable energy industry since last year. As the company issued 90 million of new private placement shares to raise RM25.6 million for its upcoming expansion plan. Linking the private placement exercise with the direction of the company as well as the recent bullish landscape of the commodities related industry, I believe JAG is looking at equping itself wiith more financial room for its potential new venture in RE sector while expanding its current capacities.

3) ESG Focus

Jag is likely an ESG Focus stock in Malaysia moving forward as the e-waste management operation is the core business of the company. As we foresee the semiconductor industry to enjoy a hypergrowth period in the next few years, JAG is also benefiting from its e-waste recycling business.

Being an operational environmentally friendly player, the company will be attracting the spotlight from institutional investors to leave their footsteps in JAG. Meeting the ESG compliance criteria with the company’s positioning, it will make its valuation more attractive. (EPF mentioned its investment will go 100% ESG within next 10 years!)

4) Low Valuation amid potential All Time High Profit After Tax

JAG remains on track to hit its best earnings performance this year on higher commodities prices. The company delivered a net profit of RM 10mil in the first half of FY 2021. Taking into all the positives and the recent lockdown that hits the economy of Malaysia, I think conservatively we should be looking at RM18 million for its net profit this year.

Applying a forward P/E of 25 on an ESG counter like JAG with an estimated of RM 18million net profit this financial year, I believe a target price of RM0.70 is realistic with all the catalysts.

5) Technical Analysis


 

Despite the recent market weakness, JAG is seeing a strong bullish momentum after a while of sideways trading. The price closed at 0.390 with huge volume. This is crucial point and if the share price can sustain and breakout above 0.39, it is likely to test the next resistance of 0.430.

Support : 0.355, 0.345, 0.330
Resistance: 0.400, 0.430, 0.525