Ancom Nylex to gain from deal with Thai Oil PCL

PETALING JAYA: Analysts continue to like agricultural chemicals manufacturer Ancom Nylex Bhd for its position as the largest producer of active ingredient for herbicides in South-East Asia.

Kenanga Research noted the group also benefits from the widening ban on the use of Paraquat as a weedkiller due to health concerns.

The company is also likely to gain from the continuous US-China trade tension and is a proxy to the global food production and food security goals.

Ancom announced last week a partnership with Thai Oil PCL (Top), a subsidiary of Thailand-based oil and gas giant PTT Group PCL, to streamline its industrial chemicals unit.

The arrangement allows Top to take up to 50% in Ancom’s industrial chemical trading, distribution and logistics business in a deal worth about RM77mil.

At an estimated nine to 10 times long-term price-earnings ratio (PER), the valuation looks fair to low but near-term earnings impact is neutral as the stake and operations are small, the research house said.

It added that longer-term prospects should be positive from the coming together of two regional distributors of industrial chemical.

Kenanga Research said that under the deal Ancom would group six industrial chemical companies under Maxlive Sdn Bhd (Maxlive), then sell 25% of the merged entity for US$9.32mil or about RM37mil.

“Top can buy another 25% at US$9.32mil within five years but also holds a put option to sell back its entire stake to Ancom within three years,” it added.

Top will also sign a separate distribution agreement for the Indian market with Ancom’s key shareholder, Helm AG.

Top is one of PTT’s key midstream subsidiaries and among Thailand’s leading producers of refined petroleum products and petrochemicals, with nearly 28% of the country’s refining capacity.

Top sells more than 80% of its output domestically and exports the rest mostly to neighbouring Laos, Cambodia and Vietnam.

Though PTT owns only 48% of Top, Top’s operations are integrated into the PTT supply chain and PTT consolidates Top as a subsidiary.

All in, the exercise should allow Ancom and Top to consolidate some of the region’s trading, marketing and distribution of industrial chemicals under one roof, it noted.

Kenanga Research has maintained a target price of RM1.20 for Ancom, based on 13 times PER for its financial year ending May 31, 2026 (FY26) and FY27