Since I don't expect any fluctuation in JAG's price till end of next week pre-consolidation, lets just update some details. If you could not wait for the consolidation to be completed, please sell the shares. The shares I think it will move around RM0.075 and RM0.08 till the consolidation is complete. I will be holding mine till the consolidation is complete and let's see how is the price movement.
As at 31 March 2020, JAG have RM6,240,000 worth of investment in its balance sheet. The breakdown which I share previously was it owns a total of 29,300,000 shares.
(1) JAG 29,300,000 shares @ closing 31 March 2020 of RM0.03 means in total it is worth RM879,000
Based on my own research I notice that they have shares in Techbond Group Berhad. You need some technique to be able to get this information. They have 2,330,000 shares.
(2) Techbond 2,330,000 shares @ closing 31 March 2020 of RM0.55 means in total is worth RM1,281,500.
Just to add on Techbond issue a bonus warrant for every 2 shares held in Techbond and it is listed on 2 March 2020. So from the above, JAG owns 2,330,000 shares thus they will eventually have 1,165,000 warrants.
(3) Techbond-WA 1,165,000 warrants @ closing 31 March 2020 of RM0.11 means in total is worth RM128,150.
Adding up (1) + (2) + (3) is RM2,288,650.
As mentioned above shown in the balance sheet is RM6,240,000. If you deduct the above meaning RM6,240,000 - RM2,288,650 = RM3,951,350. Please be patient while I try to explain what I'm trying to project here. I'm trying to figure out the RM3.9mil actually. The below is an extract from the annual report 2019, I'm trying to see what's inside other investment. So if you see below they have unquoted mutual funds in Malaysia quite consistent for 2019 and 2018 of approximately RM2.5mil. So if we further deduct this, we will get RM3,951,350 - RM2,500,000 = RM1,451,350 (remaining balance). What I'm trying to tell you guys is I don't know what kind of listed Company they have in this RM1,451,350. If you're someone who always attend their AGM I think it is helpful to ask the management what kind of shares they invested in the future.
Let's continue. I want to project the gain/loss of the fair value of the investement in quarter 2 by comparing to quarter 1.
So from the information above we know that JAG's have investement in two listed Company shares which is as following:
JAG shares = 29,300,000 , Price 31/3/2020 = RM0.03, Price 30/6/2020 = RM0.065, Difference is RM0.035 thus total RM1,025,500
Techbond shares = 2,330,000, Price 31/3/2020 = RM0.55, Price 30/6/2020 = RM0.815, Difference is RM0.265 thus total RM617,450
Techbond warrants = 1,165,000 Price 31/3/2020 = RM0.11, Price 30/6/2020 = RM0.18, Difference is RM0.07 thus total RM81,550
If we sum up the above we will get RM1,724,500 extra gains from. In quarter 1 results the profit after tax is RM1.528mil. However, it was mentioned that they have RM1,622,000 loss from fair value loss of investment in quarter 1 results. If we don't take into account the RM1.622mil loss actually in quarter 1 they will have RM3.15mil. What I'm trying to tell you is in Q2 they have surplus of RM1,724,000 in the shares valuation. I also mentioned to you above, I don't know the remaining RM1,451,350 what kind of listed Company they bought. So based on this information with some unknown, it looks promising.
The Company's strength and weakness.
The management are very competent in it's core business. It was mentioned they ventured in property development however not successful. They have yet to complete any project let alone launching it successfully. The majority of losses made from 2019 is due to impairment of their property development division. Although its a paper loss due to accounting treatment, well you know they're not good at it. Luckily they realised that and put it on hold as the market is not favourable. Admitting a mistake and stop doing stupid things again is something admirable. Currently they are venturing into a tender for Solar Energy in Manjung. I think this is a bright prospect due to the fact they have actually talk to the land owner and have table a proposal for the bid. I have yet to hear any other companies being able to table a bid on that yet.
For 2020 performance, it seems that the Company has already secured the contracts for financial year 2020. The below is extracted from Q4 2019 report. I will explain how the Company operates its business in the last part to enable you to have a more detailed understanding of the Company's business.
How the business operates in the industry and business model
1. The Company is around the Top 3 players in the industry. From my understanding there are around 20 companies with full recycling license in Malaysia and it is very competitive.
2. Basically the Company will purchased the e - waste from multinational electronic firms and processed it to get the precious metals and then sell in exchanges. Please take note that they can't import waste to Malaysia because the government wants our own countries waste to be treated first and they will be no importing of waste from other countries. Since I mentioned they buy from electronic firms, before this remember I mentioned the contracts secured? You need to secure contract from these electronic firms only then you have the "raw materials" on a regular basis. If you don't secure contracts with them how are you going to get the waste and then turn it into your metals and then sell in the exchanges? Hence securing contracts for your raw materials is the most important thing to do. Based on the facts, I believe their current year which is in 2020 is promising as they have put a hold on property development which causes a lot of losses in financial year 2019 based on their core operations. On their core operations they are already doing well, just please don't do some stupid things. Management are competent in their core business. Based on their past trend of quarter results, the usual profit from operations fall around RM2-3mil based on the historical trend excluding extraordinary items.
3. JAG is going to double maximum carbonation treatment capacity by June 2020 which is positive by an investment of RM3.6mil in CAPEX. Link below:
3. I mentioned a lot about other investements, which comprises quoted shares and unit trust. If I look into the Company it seems they are trying to earn a secondary income based on this. However, sometimes you see the performance is bad due to the fluctuations in share price.
4. Venturing into alternative business such as solar. I believe do solar better than do property because it is much more easier. Please again this Company don't do stupid things in the property development area for FY2020. Sometimes there are areas you're good at and some areas you're just noob. Just focus on your strength please. Other than this, I have no concerns apart from the property development part.
Thats all. Make your own decision. Different business different thing and method. Studying a listed Company is quite an interesting thing to do. I do hope I have a chance to visit their factory to see how e waste is processed and turn into gold, silver etc...This is a very interesting Company.
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