PETALING JAYA: Stronger demand for Ancom Nylex Bhd
’s herbicide, monosodium methanearsonate (MSMA), following approval for use in Brazil’s soybean crop, will drive the company’s core earnings per share growth for the financial years ending May 31, 2027 (FY27) and FY28.
Kenanga Research expects the company to deliver 10% to 16% year-on-year (y-o-y) growth in core earnings per share over FY27 and FY28.
The research house maintained its “outperform” call and target price of RM1.50 per share after the company’s post-FY26 results briefing, while keeping its FY27 and FY28 earnings forecasts unchanged.
Earnings growth would come from MSMA expansion in Brazil, continued orders for its timber preservative business, growing contributions from new active ingredients and still healthy industrial chemical earnings, it said.
Kenanga Research said the approval granted in December 2025 marked a significant growth catalyst as Brazil’s soybean planting area covers about 50 million ha compared with nine million ha for sugarcane, where MSMA had previously been approved.
It noted that Ancom Nylex is currently the only approved MSMA supplier for soybean cultivation in Brazil.
“The Brazil soybean market is not only significantly larger (five to six times) but also thus far, Ancom Nylex is the only approved MSMA supplier for soybean in Brazil,” it said.
The research house added that the company’s key competitor could require at least another three years to secure regulatory approval, while also facing pressure from customers seeking to diversify supply risks.
“All in all, the MSMA segment is expected to grow more than 10% y-o-y over FY27 to FY30,” it said.
Kenanga Research also expects the company’s timber preservative business to remain resilient despite the expiry of its current three-year supply contract this December.
It said the customer’s inhouse production had already ceased, while Ancom Nylex remained a major global supplier and was seeking another three-year extension of the contract.
Meanwhile, the research house expects industrial chemical profits to moderate after the exceptionally strong margins recorded in the fourth quarter of FY26, when inventory procured at lower prices benefited from higher selling prices following the escalation of the Middle East conflict.
It noted that negotiations with Thai Oil PCL involving about half of Ancom Nylex’s industrial chemical business are ongoing and are expected to conclude in FY27.
