Ancom Nylex Bhd is well positioned for sustained medium-term growth following regulatory approval to supply its monosodium methanearsonate (MSMA) herbicide for soybean cultivation in Brazil, opening up a significantly larger market for the group, according to Kenanga Research.
The research house said the approval, granted in December 2025, marks a major milestone for Ancom Nylex, as MSMA had previously been approved only for use in Brazil’s sugarcane plantations.
Brazil’s soybean cultivation spans approximately 50 million hectares, compared with around 9 million hectares for sugarcane, making the potential addressable market more than five times larger.
Kenanga noted that Ancom Nylex is currently the only approved supplier of MSMA for soybean use in Brazil, giving the company a first-mover advantage in the market.
The research house added that competing manufacturers could take at least three years to secure regulatory approval, while one of Ancom Nylex’s key rivals, based in Israel, is already facing pressure from customers seeking to diversify supply sources and reduce geopolitical risks.
As a result, Kenanga expects the group’s MSMA business to record annual growth of more than 10% between FY2027 and FY2030.
Timber preservative demand expected to remain resilient
Kenanga also expects Ancom Nylex’s timber preservative business to remain robust despite its existing three-year supply agreement expiring in December this year.
The research house said the customer has ceased its in-house production, increasing reliance on external suppliers, while Ancom Nylex remains one of the world’s leading producers of timber preservatives.
The group is currently seeking a further three-year extension of the supply contract.
Industrial chemicals margins to normalise
Meanwhile, Kenanga expects earnings from the industrial chemicals division to moderate after an exceptionally strong FY2026.
The segment benefited from sharply higher selling prices following the Middle East conflict earlier this year while carrying lower-cost inventory purchased before prices surged, resulting in margins doubling year-on-year during the fourth quarter of FY2026.
With inventory costs normalising, margins are expected to ease over the coming financial year.
The research house also highlighted ongoing negotiations between Ancom Nylex and Thailand’s Thai Oil PCL (TOP) involving approximately half of the group’s industrial chemicals business.
If concluded during FY2027, the partnership would allow Thai Oil to expand its presence in Malaysia through Ancom Nylex’s distribution network, while enabling Ancom Nylex to broaden its product portfolio.
Freight costs remain a near-term headwind
Kenanga cautioned that elevated freight costs are likely to persist through FY2027 amid renewed tensions in the Middle East.
Container shipping rates have risen from around US$2,000–US$3,000 per container in the fourth quarter of FY2026 to approximately US$4,000–US$5,000 in June 2026.
While freight rates are expected to remain volatile over the next year, the research house anticipates they will gradually ease in FY2028.
Outperform maintained
Kenanga maintained its “Outperform” recommendation on Ancom Nylex with an unchanged target price of RM1.50, based on a calendarised FY2027–FY2028 price-earnings multiple of 15 times.
The brokerage continues to view the company as a key beneficiary of long-term global food security trends, supported by its position as Southeast Asia’s largest producer of herbicide active ingredients.
It also noted that Ancom Nylex continues to benefit from the ban on paraquat use in Brazil and Thailand, while ongoing US-China trade tensions have strengthened its strategic position, highlighted by Germany-based Helm AG becoming the group’s largest shareholder.
Risks to the outlook include prolonged elevated freight costs and weaker-than-expected demand across its industrial chemicals business.
