PETALING JAYA: Ancom Nylex Bhd
is expected to experience a year of consolidation in financial year 2025 (FY25), with a strong earnings recovery projected for FY26.
For the second half of 2025 (2H25), Ancom Nylex is guiding towards more “normal” profits after a disappointing 1H25, Kenanga Research said.
Earnings in 1H25 were hampered by unusual items, from high freight costs to negative currency impacts and higher tax rates, with profits dragged down by an estimated RM20mil in unusual items, which is likely to abate or not recur.
FY26 should see a strong year-on-year (YoY) recovery from not only weak comparatives, but more importantly from a slew of old and new profit drivers, it said.
The research house kept its earnings forecasts for the company, with an “outperform” rating and a target price (TP) of RM1.20 per share.
At a TP of RM1.20 a share, based on 13-times FY26 price-to-earnings ratio (PER), Ancom Nylex is valued at only half the forward PER of much larger regional agricultural chemical peers.
Risks to the call include a downturn in crop production in key markets, regulatory risk related to artificial intelligence (AI) and foreign-exchange translation risk.
Kenanga Research favours Ancom Nylex due to its position as the largest herbicide active ingredient producer in South-East Asia, benefiting from the widening ban on Paraquat use.
The company is likely to gain from the US-China trade tensions, and serves as a proxy to global food production and food security goals.
Additionally, its timber preservative stock-keeping unit remains profitable and freight charges to most destinations have started to ease, except for US ports such as Savannah and Memphis.
Ancom Nylex’s core earner for the group is monosodium methanearsonate (MSMA), which is exported widely including to the United States, Brazil and Thailand, where orders have probably inched up 2%-3% y-o-y.
The company already sells MSMA to sugarcane planters in Brazil and is now applying to sell MSMA to the country’s soybean sector, which has five times the planting area of sugarcane.
Two out of the three necessary approvals have been obtained in the past two years and Ancom Nylex hopes to receive the final consent for limited sales in 2H26, with a potential uplift of 5%-10% in FY26.
Ancom Nylex is also poised to begin more meaningful sales of AI “T” in FY26, following the fine-tuning of a new phosgenation process to ease raw material access.
A new AI product, “S,” could launch in late FY26 or early FY27, while Bromacil and Ester, launched two years ago, are growing within their respective niches.
Kenanga Research said Ancom Nylex continues to streamline its industrial chemicals segment, including trimming headcount and relocating its southern peninsula storage facility to Johor.
