PETALING JAYA: Ancom Nylex Bhd
is expected to benefit from higher selling prices for its industrial chemicals amid elevated crude oil prices, while the gradual ramp-up of its herbicide business in Brazil could provide additional growth over the next three to five years.
Hong Leong Investment Bank (HLIB) Research noted Brent crude prices remained elevated at an average of US$89 per barrel year-to-date, which is expected to support margin expansion for the group’s industrial chemicals division.
Meanwhile, the research house said monosodium methanearsonate (MSMA) orders for Brazil’s soybean market have begun to materialise following label approval in March 2026, although volumes remain modest as marketing efforts are still in the early stages.
“From its current annual sales of about 11 million litres, the group targets an additional 2.5 million to five million litres annually from Brazil over the next three to five years.
“Nevertheless, we remain cautious over rising shipping costs amid renewed geopolitical tensions in the Middle East, which could keep freight rates elevated for a prolonged period,” HLIB Research said in a report recently.
Ancom reported a net profit of RM23.1mil for the first quarter of financial year 2027 (1Q27).
After adjusting for fair value gain on investment, impairment loss on receivables, net gain on plant and equipment disposal and foreign exchange, core net profit came in at RM22.1mil.
“The results came in slightly below both our and consensus estimates at 22% and 22.7% of full-year forecasts respectively.
“The negative deviation was due to a weaker-than-expected contribution from its agrichem segment,” the research house said.
HLIB Research said on a year-on-year (y-o-y) basis, Ancom’s revenue rose 19.2%, driven primarily by stronger industrial chemicals revenue on higher average selling prices following the increase in Brent crude prices, while the segment’s earnings before interest and taxes improved by 91% supported by greater operational efficiency within the distribution business.
“This was partly offset by softer agrichem revenue due to a weaker US dollar against the ringgit. In tandem with higher revenue, core net profit increased 10.4% y-o-y,” the research house said.
HLIB Research maintained its “buy” call on Ancom with a lower target price of RM1.27 (from RM1.32) pegged to 15 times FY27 earnings per share.
“We like Ancom for its niche as the sole large-scale producer of active ingredients (AIs) for herbicides in Asean as AI manufacturing commands high barriers to entry, and earnings growth potential is driven by its pipeline of new AIs to be rolled out,” the research house said.
Meanwhile, Kenanga Research said the financial year 2027 (FY27) looks to be a consolidation year with stronger growth in FY28.
The research house expects slower growth in FY27 as Ancom needs to recover from the loss of a key MSMA distributor in Brazil.
“While 1Q27 agri-chemical performance suggests this recovery is doing better than we had earlier expected but it is still in recovery mode and margins are tighter than expected. Nevertheless, the group is still set to grow over FY27 to FY28,” the research house said.
Kenanga Research said MSMA orders held better than its earlier expectations.
The research house said MSMA has been used by Brazilian sugarcane planters for many years but sales had been disrupted by the departure of a key distributor in January 2026.
“However, in December 2025, Brazil started to allow soyabean farmers to also use MSMA.
Fresh sales to this segment helped mitigate the weaker sales to the sugarcane segment.
Our forecasts still assume about a 3% dip in FY27 MSMA sales in Brazil before improving in FY28.
“Long-term MSMA prospects are bright as soyabean makes up 50 million haof planting area in Brazil compared to nine million ha for sugarcane.
“Including non-Brazil sales, FY27 MSMA sales should inch up 10% y-o-y followed by 15% in FY28,” the research house said.
Kenanga Research said it continues to like Ancom for it being the largest AI producer for herbicide in South-East Asia, a beneficiary of widening ban of the highly toxic Paraquat, and an alternative, neutral supplier amidst US-China trade tension.
The research house added the group is indirectly a proxy to global food production and food security as well.
Kenanga Research maintained an “outperform” call on Ancom with a lower target price of RM1.40, from RM1.50, but still based on 15 times calendarised FY27 to FY28 core earnings per share.
