PETALING JAYA: Niche agrichemical producer Ancom Nylex Bhd
’s financial year 2024 (FY24) and FY25 earnings are anticipated to remain healthy despite some hurdles in the near term.
Kenanga Research said the company’s FY24-FY25 forecast earnings are expected to be healthy on the back of several factors.
“Sales of monosodium methanearsonate (MSMA) herbicide, a less toxic alternative to Paraquat, in Latin America is helping to offset softer Thai demand, as drier weather tends to reduce MSMA usage.
“More importantly, the company’s variant of MSMA has finally been approved for use in Indonesia, while Brazil should extend MSMA applications beyond sugarcane to include soyabean within the next 12 months.”
The research house noted that timber preservative orders are still robust as Ancom Nylex commands a strong market position for this product range.
“Talks with a longstanding US buyer for a two to three-year contract are ongoing but, regardless, it is still providing advance orders to the company. Importantly, margins for this range are usually superior to other agrichemical lines,” the research house said.
The company is targeting to launch two to three more new products over FY24-FY26. Among the new products are active ingredients that have been delayed for six months.
Kenanga Research is maintaining its “outperform” call on the company with a target price of RM1.50.
Meanwhile Hong Leong Investment Bank Research (HLIB Research), which is maintaining its “buy” call on the stock, said it is cutting its FY24, FY25 and FY26 forecast earnings by 11%, 9% and 5%, respectively, as it is factoring in the delays in commercialising Chemical T, a chemical applied in sugar cane crops, as well as Chemical S (a chemical applied in rice and cereal crops), based on its estimates.
For the third quarter ended Feb 29, 2024, Ancom Nylex posted a higher net profit of RM20.11mil compared with RM16.36mil a year ago. Revenue for the quarter rose to RM516.78mil from RM483.95mil previously.
For the nine months, net profit stood at RM63.03mil against RM56.95mil in the previous corresponding period.
Earnings per share was higher at 6.64 sen from 6.4 sen previously. Revenue in the nine months, however, slipped to RM1.51bil from RM1.57bil in the same corresponding period last year.
