New agrochemicals, stronger exports to boost Ancom Nylex profits
The group posted a lower net profit of RM17.07mil for the fourth quarter of financial year ended May 31, 2025 (4Q25), bringing its full-year earnings to RM64.49mil.
Quarterly revenue stood at RM459.37mil, while full-year revenue totalled RM1.87bil.
Despite the year-on-year decline, Hong Leong Investment Bank (HLIB) Research said the results came in slightly ahead of its expectations at 106% of its forecast, and broadly in line with consensus estimates.
Looking ahead, HLIB Research said earnings growth will likely be supported by the full commercialisation of Chemical T, a new active ingredient that began production in April 2025 and is expected to reach full annual capacity of 1,000 tonnes by the second quarter of calendar year 2025.
The research house maintained its 'buy' call on Ancom Nylex, with an unchanged target price of RM1.13, based on 15 times FY26 forecast earnings per share (EPS) of 7.5 sen.
Kenanga Research shared a similarly positive view, projecting a 50% year-on-year increase in FY26 core EPS to 8.8 sen, up from 5.9 sen in FY25.
The forecast, however, was revised lower by 9% due to delays in monosodium methanearsonate (MSMA) herbicide approvals for the Brazilian soybean market and higher-than-expected freight costs.
'FY26 earnings could have been stronger if not for the delay in regulatory approval for Brazil's soybean segment,' it said, noting that approval is now more likely in FY27.
In the near term, Kenanga Research expects earnings to be supported by improved MSMA exports, steady timber preservative sales under a three-year US supply contract, and contributions from newer active ingredients.
Chemical T is set to provide full-year contribution in FY26, while another compound, Chemical S, is targeted to begin contributing from FY27.
The group is also expected to benefit from cost savings arising from the relocation of its Singapore tank storage facilities to Johor, although industrial chemical margins are expected to remain tight.
Kenanga Research also highlighted Ancom Nylex's potential upside from the ongoing reverse takeover of Green Lagoon Technology Sdn Bhd (GLT) via its 34%-owned associate, Ancom Logistics Bhd .
Upon completion in FY26, Ancom Nylex is expected to hold a 22% stake in GLT, which will contribute recurring income through an annual profit guarantee of RM8mil to RM10mil.
Meanwhile, the group's issued share base rose 10% in FY25 due to private placement and conversion of Warrant B, which is expiring in September.
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