Fund Managers are Secretly Collecting this Stock?!
Established in 1984, Tex Cycle Technology (M) Bhd (“Tex Cycle”) has cemented its position as a prominent recycling and waste management company listed on the ACE Market of Bursa Malaysia. Recently, the company has been attracting significant attention due to several strategic developments.
Tex Cycle is one of the few companies licensed by the Department of Environment to operate a waste recovery facility in Selangor. This licence is extremely difficult to obtain due to stringent environmental regulations, highlighting Tex Cycle’s commitment to environmental care and consistent growth over the years.
In today’s announcement, Tex Cycle disclosed a 10% private placement, the first such fundraising effort in the company’s history, aimed at raising up to RM32.02 million. This move has intrigued many investors, raising questions about the motivations behind this sudden fundraising initiative.
Those closely following Tex Cycle might recall their April 2024 announcement about partnering with Evolusi Bersatu Sdn. Bhd., a prominent oil and gas company to set up a new Joint Venture (“JV”). Together, they plan to invest RM100.0 million in Sabah’s first integrated scheduled waste management facility, expected to be fully operational by Q4 2025.
Historically, Sabah has been sending waste to Peninsular Malaysia for processing, which is costly and poses contamination risks during transportation. This new facility will address these issues, targeting various industries, especially oil and gas.
To fund this ambitious project, Tex Cycle proposed a private placement of 25.6 million new shares at RM1.25 per share, while the company is currently trading at RM1.34. This strategic move is set against the backdrop of Malaysia’s active efforts to strengthen waste management and transform environmental governance.
The government aims to achieve a National Recycling Rate (NRR) of 40% by 2025, up from 31.52% in 2021. Integrated waste treatment facilities (IWTFs) like the one Tex Cycle is building are key to this goal, capable of treating up to 95% of waste with only 5% needing disposal at sanitary landfills.
Sources indicate that the placement has already attracted institutional investors, highlighting its high demand. While concerns about dilution are natural, this placement could be a game changer for Tex Cycle, given the potential impact of the new waste management facility.
In conclusion, $TEXCYCL(0089.MY$ fresh partnership and ambitious project plans, combined with government support for improved waste management, position the company for significant growth. The private placement, despite initial dilution concerns, could pave the way for substantial future gains, making it a compelling consideration for savvy investors.
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