Image credit: www.recyclinginside.com

BACKGROUND

I first wrote about Paragon Union (Paragon) 2 weeks ago when the price was at RM3.32. A lot has happened in the last 2 weeks that warrants another writeup to update readers. 

PRICE CHART

Paragon price is currently in a very strong motive wave 3, with a minimum target of RM7.08 based on wave 3 Elliott wave calculation. The recent move up with the biggest ever daily volume to RM4.05 confirms the bullish wave 3 motive behaviour. The slight retracement was met with strong support at RM3.45 which happens to be the breakout pivot point from the previous high registered on 3 May 2023. This is one  of the most textbook bullish charts a technician loves to see. Breakout with volume followed by a test of breakout pivot support holding and then continuation of motive move in the right direction!

From the chart perspective the uptrend move is very much intact and the recent high of RM4.05 serving as only a minor resistance en route to test the much higher resistance levels as indicated by Fibonacci and Elliott wave projections.

REVALUATION OF ASSETS

The recent selldown following the announcement of stellar profits of RM34 million could have been a knee-jerk reaction by some investors who saw the profit recognition of RM32 million coming from a revaluation exercise of Paragon’s assets. Operating profit from the carpet business came in at around RM2 million, which is still decent but perhaps, some investors viewed the recent run up in price being a little excessive. 

To put things in perspective, I feel any investor who is buying Paragon now should not be focusing on the legacy business but instead, to take into consideration, the potential of the new business direction in the recycling business.

The Bursa announcement on 27 October 2022, made mention that Paragon is looking at diversifying into the recycling business, focusing on metals initially. Since then, there has been little news or announcements on the progress of the new recycling business. If one is to read between the lines from the revaluation exercise, could this be an exercise to pave the way for the emergence of the recycling business?

WHO IS KOON HOI CHUN?

Just to recap, Koon Hoi Chun emerged as the new substantial shareholder in Paragon when he purchased a 60.41% stake via his private vehicle AKK Capital San Bhd back in 2021. Based on his profile in the Annual Report, Mr Koon is a substantial shareholder and Managing Director of Technovate Holdings Sdn Bhd and via other companies he owns, is involved in the management of industrial waste including recycling and processing industrial waste and metal scraps ingots.

What caught the market’s interest is his association with Press Metal where he started his career as a Sales and Marketing Executive in Press Metal UK Ltd. Referring to the article in the Edge dated 18 Sept 2023, it is learnt that Mr Koon Hoi Chun is indeed related to the founding family of Press Metal Aluminium Holdings Bhd, being the son of  co-founder Koon Poh Kong.

CONCLUSION

It has been my motto to always respect price action as price always precedes news flow. Given the reputation of the Koon family coupled with powerful price action, everything points to the rally in Paragon continuing! Could this be another Press Metal or PMB Tech in the making? I would not bet against it!

Disclaimer: This blog is created for sharing of trading ideas only. It is not in any way or form meant to be an inducement or recommendation to buy or sell any stocks. Consult your financial consultant before making any financial investments