PETALING JAYA: BIMB Securities Research expects Nextgreen Global Bhd
’s (NGGB) earnings growth to accelerate over the next three years, underpinned by higher biofertiliser sales, an expansion of its existing pulp line, and the commissioning of an animal-feed facility.
The research house also projected that from the second half (2H28) of the financial year ending December 2028 (FY28) onwards, the much larger NeuWhite Phase 1 project should support further earnings growth for NGGB.
BIMB Securities Research forecasts NGGB’s revenue and profit after tax and minority interest (Patami) to grow at compound annual growth rates of 37.5% and 37.8%, respectively, between FY25 and FY28.
It initiated coverage on the counter with a “hold” call and a target price (TP) of 76 sen per share, citing concerns over cash conversion, execution and funding despite the company’s attractive longer-term growth prospects. The stock last traded at 69.5 sen.
“We forecast NBBG’s revenue to reach RM97.6mil, RM147.8mil and RM236.6mil, and Patami to reach RM47.1mil, RM69.6mil and RM80.2mil in FY26 to FY28, respectively,” BIMB Securities Research said in a report.
The research house said biofertiliser would be the main earnings catalyst in FY26, followed by the upgraded pulp line and animal-feed operation in FY27, before the NeuWhite project starts contributing from 2H28.
NGGB has built a waste-to-value platform at its 410-acre Green Technology Park in Pekan, Pahang, converting oil-palm empty fruit bunches (EFB) into non-wood pulp and paper while reusing recovered process streams to produce biofertilisers.
Manufacturing accounted for RM85.8mil, or 94.3%, of group revenue in FY25. The existing 10,000-tonne-per- annum EFB pulp line operated at about 86% utilisation in FY25, producing around 8,600 tonnes.
The company plans to raise capacity to 15,000 tonnes towards the end of 2026, although BIMB Securities Research expects the upgrade could temporarily constrain production in FY26 before improving supply capacity in FY27.
Biofertiliser has emerged as the group’s largest contributor, with revenue hitting RM55.7mil in FY25, representing about 61% of group revenue.
Meanwhile, liquid biofertiliser revenue rose 51% year-on-year to RM13.4mil in the first quarter of FY26 (1Q26) and accounted for about 75% of group revenue.
The segment also has considerable capacity headroom.
Liquid biofertiliser output of 5.84 million litres in FY25 represented only about 19% of the company’s existing 30-million-litre annual capacity, with management targeting an increase to approximately 45 million litres in FY27.
A 30,000-tonne solid-biofertiliser facility has also obtained its Certificate of Completion and Compliance, although testing, commissioning and regulatory clearances were still pending at the latest update.
BIMB Securities Research said management-presented trials offered encouraging evidence of the products’ effectiveness, including paddy trials by the Muda Agricultural Development Authority that recorded yields of 6.3 tonnes per hectare, compared with 5.4 tonnes for a control plot.
Trials involving Felcra Bhd and Wilmar East Java also showed yield improvements, although commercial adoption of the products remains dependent on regulatory approvals, confirmed orders and repeat demand.
Beyond fertiliser and pulp, NGGB is developing a 10,000-tonne-per-annum animal-feed facility using oil-palm fronds, palm-kernel cake and other agricultural inputs, with commissioning targeted for late 2026.
BIMB Securities Research expects no material revenue contribution to NGGB from the facility in FY26, followed by production of 5,000 tonnes in FY27 and 7,500 tonnes in FY28.
The longer-term growth opportunity lies in NeuWhite Phase 1, which is designed to add 150,000 tonnes per annum of bleached chemical EFB pulp capacity at an estimated cost of RM882mil.
Completion is targeted for around mid-2028.
“NeuWhite Phase 1 is designed to add 150,000 tonnes per annum of bleached chemical EFB pulp capacity, 10 times the capacity of NGGB’s upgraded 15,000-tonne existing pulp mill,” the research house said.
NGGB has a 41.25% effective economic interest in NeuWhite through its 55% stake in Nextgreen IOI Pulp, which owns 75% of the project.
IOI Corp Bhd provides plantation expertise and feedstock access, while Xiamen C&D is expected to support equipment procurement, financing, marketing and potential distribution or offtake.
However, BIMB Securities Research cautioned that the group’s expansion is capital intensive.
Despite cumulative Patami of RM63.1mil over FY23 to FY25, NGGB recorded a cumulative operating cash outflow of RM111.6mil, with inventories absorbing RM176.5mil over the period.
Net gearing had risen to 0.31 times by end-March 2026.
The research house also flagged customer concentration as a risk, with five major customers accounting for about 80% of FY25 revenue.
Delays in project financing, construction, commissioning, customer qualification or product adoption could therefore affect earnings and cash generation.
Against this backdrop, BIMB Securities Research valued NGGB at 12 times FY27 forward earnings, in line with the weighted average multiple of its regional peers, arriving at the research house’s 76 sen per share TP.
While the TP represents about 8% upside from the 70 sen reference price, the research house said stronger cash conversion and clearer project execution would be needed to justify a premium valuation.
