PETALING JAYA: Berjaya Research Sdn Bhd continues to favour Ancom Nylex Bhd’s post-second quarter financial year 2026 (Q2 FY26) earnings announcement, given its position as the sole large-scale producer of herbicide active ingredients (AI) in Southeast Asia, increasing demand for agricultural chemicals, the continuous launch of new AI products and its status as a beneficiary of the ban on paraquat.
However, the research firm highlighted key downside risks, including unfavourable global weather patterns, supply chain disruptions, fluctuating input costs and the depreciation of the US dollar versus the ringgit.
On earnings, Berjaya Research pointed out that Ancom Nylex’s H1 FY26 revenue and Patami came in below the firm’s expectations, accounting for 44.1% and 42.8% of its full-year estimates, respectively.
“The earnings miss was mainly attributed to weaker-than-expected contributions from both the industrial and agricultural chemicals segments amid subdued selling prices,“ Berjaya Research said in a report.
On a year-on-year basis, Ancom Nylex’s revenue declined 4.9% to RM428.8 million in Q2 FY26, from RM450.7 million in the quarter last year, mainly weighed down by lower contributions from the industrial chemicals (-4.3%) and polymer (-30.1%) segments amid weaker demand and lower ASPs, while the agricultural chemicals segment remained stable.
However, Patami increased 18.9% to RM18 million, up from RM15.2 million, largely driven by improved margins in the industrial chemicals segment and better operational efficiency in the distribution business.
On a quarter-on-quarter basis, Ancom Nylex’s revenue fell 4.1% from the preceding quarter due to softer ASPs across the industrial and agricultural chemicals segments, while Patami contracted 10.2% in tandem with the weaker topline.
“We trimmed our FY26/FY27 earnings forecasts by 10.8%/8.2% to reflect ongoing weakness in global commodity prices impacting the industrial chemicals segment, as well as lower revenue assumptions for agricultural chemicals amid a firmer ringgit.
“Following softer ASP assumptions under current market conditions, we revise our FY26/FY27 earnings forecasts lower and maintain our Buy recommendation on Ancom Nylex with a lower target price of RM1.08 (-RM0.08), derived from ascribing an unchanged target price-to-earnings ratio of 13x to our revised FY27 earnings per share,“ Berjaya Research said.
On outlook, Berjaya Research said moving into H2 FY26, agricultural chemicals export volumes are expected to remain healthy, although US dollar weakness may weigh on revenue given the group’s net exporter profile.
The research firm said approval of the MSMA label for soybean crops by Brazil’s environmental agency represents a major catalyst, expanding the addressable market to nearly 5x that of sugar cane.
“This timely approval allows the group to participate in local tenders in April-May and secure orders for the upcoming soybean planting season.
“To support rising MSMA volume growth, the group has identified a potential warehouse acquisition near Port Klang to expand storage capacity and reduce reliance on existing third-party facilities,“ Berjaya Research said.
Meanwhile, the firm noted that the commercialisation of new active ingredients is progressing well.
AI T has ramped up steadily, with initial deliveries to Brazil completed by the end of 2025 and additional orders secured in new markets.
Demand is expected to strengthen in line with the seasonal application cycle across southern hemisphere countries.
AI S is now in trial production following the completion of machine installation, keeping it on track for earnings contribution from FY27 onwards.
“Notably, both AI T and AI S have been granted pioneer status by Mida.
“As for the industrial chemicals segment, it is expected to remain subdued amid soft global commodity prices.
“Nevertheless, the management continues to focus on cost optimisation and operational efficiency to mitigate the impact of weaker sales volumes and ASPs,“ Berjaya Research said.
