PETALING JAYA: The recent approval of monosodium methanearsonate (MSMA) in Brazil’s soybean crop is expected to bode well for Ancom Nylex Bhd
, as existing capacity is likely to double from current levels.
Between financial year 2026 (FY26) and FY27, targeted volume growth is expected to be between 20% and 30%.
In a report, Hong Leong Investment Bank Bhd (HLIB) said given the soybean herbicide application cycle typically falls between July and September, Ancom is well-positioned to capture the upcoming cycle, with orders potentially commencing as early as April to June 2026.
“We expect fourth-quarter 2026 (4Q26) earnings to be supported by higher average selling prices in the industrial chemicals segment for new orders in March to April 2026, in line with the uptick in Brent crude oil prices,” the research house said.
It, however, cautioned that there are still potential downside risks to demand if fertiliser prices continue to rise, which could dampen herbicide usage.
HLIB maintained a “buy” call on the stock with a target price of RM1.13, pegged to price-to-earnings (PE) multiple of 15 times FY26 forecast earnings per share, a slight discount to its global peers’ average PE of 17.5 times.
Meanwhile, Kenanga Investment Bank Bhd said despite a softer than expected year-to-date performance, Ancom’s profits were still higher year-on-year (y-o-y).
It noted the group’s core net profit of RM62.3mil increased 36% y-o-y and came in at 70% of Kenanga’s and 74% of consensus full-year estimates.
This was supported by better industrial chemical margins, despite agri-chemical contribution slipping 6% due to softer revenue and a stronger ringgit, which also affected margins.
“Overall, the results were within our expectations, but a weaker 4Q26 margin is expected due to higher freight costs arising from the Middle East conflict and disruption in its MSMA distribution network in Brazil,” it said.
Kenanga said Ancom’s 3Q26 results were also within expectations, and a surprise dividend-in-specie of one treasury share for every 100 ordinary shares held was announced.
Furthermore, Ancom’s timber preservative exports are likely to stay firm due to a three-year contract that runs till 2027.
“Thereafter, orders should continue as the buyer has ceased in-house production and there are only a few suppliers worldwide.
“A new contract is also possible given the longstanding relationship between the two,” Kenanga added.
