PETALING JAYA: Nextgreen Global Bhd
’s earnings growth is likely to be slower than previously expected, says Mercury Research, due to deferred contributions from the late scheduled commissioning of its animal-feed plant and pushed-back timeline of the NeuWhite pulp facility.
Following a recent briefing by the company’s management, the research firm cut its earnings estimates for the financial year 2026 (FY26) and FY27 by 38% and 30%, respectively, to RM52mil and RM73mil.
It said one of the key reasons for the downward revision was negligible topline contribution from its animal feed project in FY26, compared to the previously assumed RM90mil contribution.
Based on previous selling-price assumptions, Mercury Research said the fully utilised 10,000-tonne animal feed facility could generate approximately RM18mil to RM20mil of annual revenue.
However, due to its expected late-year commissioning of around Oct 2026 to Nov 2026, meaningful revenue impact is anticipated to only materialise from FY27 onwards, it said.
Consequently, its animal feed facility capacity assumptions have been lowered to 10,000 tonnes per annum for FY27 from 50,000 tonnes per annum.
The research house also said Nextgreen’s proposed 150,000-tonne NeuWhite pulp facility’s commercial timeline looks to have shifted towards 2028, deferring any likely contribution until then.
Meanwhile, its capacity projections for the group’s existing empty fruit bunch (EFB) pulp facility have been scaled back to 15,000 tonnes per annum for FY27 from 25,000 tonnes per annum previously.
While the EFB pulp facility’s capacity expansion from 10,000 tonnes to 15,000 tonnes per annum is seen as supportive of its long-term ambitions, it said the upgrade may temporarily disrupt FY26 production, with full earnings contribution only expected from FY27.
“Nextgreen’s long-term integrated waste-to-value proposition remains credible with growing commercial foundation in pulp and biofertiliser, but the earnings expansion is likely to be more gradual and capital-intensive than previously assumed,” Mercury Research said.
It, however, noted that the earnings revisions are partially cushioned by 100% income-tax exemptions, underpinning effective tax-rate assumptions of 3% and 5% for FY26 and FY27, respectively.
Additionally, it said NexBooster liquid biofertiliser remains the group’s most established near-term growth and earnings driver, while exports to African markets present meaningful longer-term opportunities for its fertiliser products.
The research house has trimmed its target price for Nextgreen to 75 sen from 85 sen previously after rolling over valuations to FY27 forward earnings per share of 6.3 sen based on an unchanged price-to-earnings multiple of 11.8 times.
It also downgraded its call on the stock to “hold”, citing limited upside from its current price of 73 sen.
