PETALING JAYA: Brazil’s approval of monosodium methanearsonate (MSMA) for soybean cultivation is set to be a positive catalyst for Ancom Nylex Bhd
, with the group’s existing production capacity expected to potentially double from current levels.
In December last year, Brazil approved allowing soybean farmers to use MSMA.
According to Kenanga Research, this is expected to drive a multi-year growth outlook for Ancom Nylex supported by three key factors.
One is that the group has an established presence in Brazil, having supplied MSMA to sugarcane farmers for nearly two decades, meaning this is not a new market entry.
Secondly, Brazil’s soybean cultivation area is five to six times larger than sugarcane and continues to expand at around 3% year-on-year.
Thirdly, the research house said Ancom Nylex is likely to capture additional market share as buyers diversify away from its Israel-based competitor to mitigate supply chain risks. “As such, we believe MSMA orders can grow 10% to 15% a year over the financial year 2027 (FY27) to FY30,” Kenanga Research said in a report post the group’s results briefing for the nine months ended Feb 28, 2026.
For the nine-month period, the company’s net profit rose to RM56.41mil from RM46.42mil for the same period last year following operational efficiency in the industrial chemical division’s distribution business.
However, revenue for the nine-month period declined to RM1.32bill from RM1.42bil in the corresponding period in 2025, mainly due to softer average selling prices in the industrial chemicals segment and a weaker US dollar, which reduced the reported value of agrochemical exports.
Other takeaways from the briefing are the group is likely to see steady timber preservative orders.
“We expect timber preservative exports to stay relatively firm even after their three-year supply contract ends in January 2027 because there are only a handful of producers globally and the longstanding buyer has ceased its own production in-house.
“However, high freight costs are expected to erode margins in the fourth quarter of FY26 (4Q26) and 1Q27 before normalising in late FY27,” said Kenanga Research.
It note that freight rates have increased from about US$2,000 to US$4,000 to US$5,000 per container, following the Middle East conflict, though they remain well below the recent peak of around US$10,000 seen in September 2021.
Rates are expected to remain elevated until 1Q27 before gradually easing.
However, stronger industrial chemical margins in 4Q26 are expected to help offset the impact of higher freight costs.
Kenanga Research maintains an “outperform” call on the stock with a target price of RM1.50, based on 15 times FY27 to FY28 price-to-earnings (PER) ratio.
This is at a significant discount to larger regional agricultural chemical peers, which trade at around 25 to 30 times forward earnings.
