Total Lockdown UPDATE:

ANCOM's business operations fall under the MITI-approved list of industries, to resume as usual.

Ancom's core businesses of Agrochemicals, Industrial & Petrochemicals are essential industries that are allowed to operate throughout the total-lockdown period. As agrochemicals are part of the supply chain for the plantation industry, the main manufacturing sites of Ancom would continue operating while admin/office staffs are working from home according to sop guidelines.

Discussion has been ongoing ever since offer received.

Fund managers already start taking positions when retailers panic sell last week. Once Nylex board announced acceptance, then it would be just EGM and paperwork to conclude the whole consolidation for ANCOM to emerge as a brand new formidable chemical group.

Market giving Nylex shares a discount to the RM1 value now due to the board yet to announce acceptance of the offer. Once it is announced sometime estimated in June, then discount should narrow and share price should gradually rise to RM1 nearing the EGM.

Ancom just dipped below RM1.50 now which is a no-brainer buy as their Q4 should be better than Q3 + the ongoing inflation theme on commodities. MCO3.0 really caused panic selling across the board.

Perfect time to add position.

Inflation is the current theme for the next few months. Investors repositioning their portfolio to be more defensive and away from tech sector devaluation. Sectors that will be in focus would be soft and hard commodities related such as agrochemical sector serving crop growers.

Key strategy for ANCOM:
1) Agrochem - Ancom serves the cotton market in US. Big name apparel brands have been boycotting cotton from China due to their concerns on farming practices in Xinjiang (can google "China Xinjiang Cotton"). This will continue to drive cotton export from US, indirectly benefitting agrochemical companies serving the US market.

CPO prices also remain very high above RM4k/MT. This encourages palm oil plantations to continue to buy more fertilizers agrochem to ensure the best yield for their land.

2) Petrochem - oil prices have remained firm and on an upward trend. This bodes well for Nylex as a trader of petrochem derivative products such as methanol. Ancom stands to benefit from further consolidation of the petrochem biz that is currently held under Nylex.

Following the sell-off after the consolidation announcement for those who do not understand the rationale behind the RM1.50 per Ancom share offer, plus panic selling from weak market on MCO 3.0 news, this seems to be the best chance for investors to add weight on Ancom at an attractive entry point with at safe support level.

Valuation Exercise:
YTD Q3 PATAMI [ 3 + 6 + 7 ] = RM16m
Assuming a conservative RM7m for Q4,
full year FY21 PATAMI RM23m
(Q4 results expected to be even better than Q3)

What is a fair P/E for ANCOM?
Local agrochem Hextar trading at P/E of 30

Other listed agrochem companies:

- Bayer Crop Science [P/E 52]
- Corteva [P/E 49]
- Sumitomo [P/E 59]
- Adama [P/E 59]

Average of P/E 50+ !!
Because they deal with FOOD SECURITY via crop protection, just like ANCOM.

Taking CURRENT FY patami of RM25m at various levels of P/E, what would the market cap of ANCOM be from current level of RM421m?

P/E 25 = RM625m [ 48% upside ]
P/E 30 = RM750m [ 78% upside ]
P/E 35 = RM875m [ 108% upside ]

ANCOM's turnaround story has just begun, so the P/E may be gradually moving up. Plus, management forecast next year's results to be better than the current year's RM25m.

Verdict: there is still immense value in ANCOM to be unlocked

Valuation Exercise:
YTD Q3 PATAMI [ 3 + 6 + 7 ] = RM16m
Assuming a conservative RM7m for Q4,
full year FY21 PATAMI RM23m
(Q4 results expected to be even better than Q3)

What is a fair P/E for ANCOM?
Local agrochem Hextar given P/E of 30 by PublicInvest.
What about other listed agrochem companies?

- Bayer Crop Science [P/E 52]
- Corteva [P/E 49]
- Sumitomo [P/E 59]
- Adama [P/E 59]

Average of P/E 50+ !!
Because they deal with FOOD SECURITY via crop protection, just like ANCOM.

Taking CURRENT FY patami of RM25m at various levels of P/E, what would the market cap of ANCOM be from current level of RM421m?

P/E 25 = RM625m [ 48% upside ]
P/E 30 = RM750m [ 78% upside ]
P/E 35 = RM875m [ 108% upside ]

ANCOM's turnaround story has just begun, so the P/E may be gradually moving up. Plus, management forecast next year's results to be better than the current year's RM25m.

Verdict: there is still immense value in ANCOM to be unlocked

My reading of the current price trend of Nylex is that those who bought on rumours sold on news, maybe due to the Minority Interests (MI) not getting the full RM1 in cash.

This is very absurd and it seems to be a great value buy right now.

Nylex MI will get the RM1 in the form of:
1) 39sen/share cash distribution
2) 9sen/share cash remaining in the listed co
3) 52sen/share of Ancom share
**Ancom issued at RM1.50 so approximately 3 Nylex shares get 1 Ancom share

Cash alone (distributed + retained) is already 48sens.
The closing price today of 86 sens means you are only paying 38sen for one third of Ancom
= (38sen x 3) = RM1.14 per Ancom share. You do the math here.

Of course there may be a discount at this moment as the deal is still not voted by Nylex MI yet but the price should eventually converge to RM1 in the coming months.

No reason for MI not voting for it as without the deal Nylex would most likely be "stuck" without this value unlocking exercise.

Will continue to accumulate this stock as well as Ancom for the coming few months to vote for the deal.

Sell on news? What a great market to be in... Thank you for those sub 1.60 tickets :)

English news:
https://www.malaymail.com/news/money/2021/04/28/ancom-to-be-fully-integrated-chemical-group-through-proposed-acquisition/1970209

https://www.theedgemarkets.com/article/ancom-proposes-buy-remaining-nylex-stake-confirms-edge-report

Mandarin news:
https://www.orientaldaily.com.my/news/business/2021/04/28/408179

https://www.sinchew.com.my/pad/con/content_2468321.html

Evolution is inevitable. Since 2018:

1) Divestment of loss-making media
2) Reduction of corporate costs and debt (that were financing media)
3) Growth of Agrochemical biz

Now, we are about to witness the next step of this evolution. Stay tuned.

There have been rumours of some exciting new surprises going forward.

As a value investor it is indeed rewarding to witness the realisation of this counter's fair value, which is RM2 in the very near term, and RM2.50 to RM3 once the new active ingredients are rolled out.

New historical high coming next week. Watch out.

Ready for 2nd gear next week? ;)

Long term buyers/collectors very patient last week when weak sellers/traders/ESOS holders were impatient to sell.

True value of the revitalised new chemical group shall prevail and firm believers shall be rewarded handsomely.

Today's selling most likely from staffs with ESOS shares as announced last Friday. Well absorbed at strong support level of 1.39 to 1.40.

Those who sold gonna regret come end of month :)

Nothing has changed since yesterday and today. Company on track to deliver its best ever performance since FY17/18.

What happened was some selling yesterday morning which possibly triggered more selling which leads to panic selling, as evident this morning when it touched 1.26.

When the stock moved from RM1 to RM1.50, many onlookers who missed the boat would moan that the stock already run, expensive already, missed the boat already etc. Everyone kept asking for a 'healthy retrace' or technical correction to enter.

When the correction indeed happens, would we make a calculated investment decision? Or continue to look see look see then moan again when the stock hit RM1.80 - RM2?

Resting on strong support, about to run up again...

ANCOM Update:

1) S5-ALB RTO reassured by S5 MD as published by TheEdge Weekly last weekend 13March

2) Ancom stands to gain from share issuance of ALB to S5 owners. Book value of 5 sen, issued at 10sen. 5sen premium for the listed shell.

3) CPO Price sustaining above RM4k/mt, palm oil plantations increasing spending on herbicides to squeeze maximum yield at current high CPO levels. ASP and volume of Ancom's agrochem unit continue to break new high, booking profits for a record year ahead.

Ancom's share price failed to take off last time due to perception that it was a conglomerate burdened with too many loss-making baggages. It has successfully transformed to a pure-play integrated mid-size chemical group in Malaysia, akin to a mini-lotte/CCM.

Ancom shall benefit from the continued commodity supercycle as growers worldwide order more of Ancom's agrochem to better manage larger tracts of plantations to maximize yield.

RM2 for mother share seemed impossible last year. It is now within reach, very very soon.

ANCOM Update:

1) S5-ALB RTO reassured by S5 MD as published by TheEdge Weekly last weekend 13March

2) Ancom stands to gain from share issuance of ALB to S5 owners. Book value of 5 sen, issued at 10sen. 5sen premium for the listed shell.

3) CPO Price sustaining above RM4k/mt, palm oil plantations increasing spending on herbicides to squeeze maximum yield at current high CPO levels. ASP and volume of Ancom's agrochem unit continue to break new high, booking profits for a record year ahead.

Ancom's share price failed to take off last time due to perception that it was a conglomerate burdened with too many loss-making baggages. It has successfully transformed to a pure-play integrated mid-size chemical group in Malaysia, akin to a mini-lotte/CCM.

Ancom shall benefit from the continued commodity supercycle as growers worldwide order more of Ancom's agrochem to better manage larger tracts of plantations to maximize yield.

RM2 seemed impossible last year. It is now within reach, very very soon.

Momokoko, yes everybody wants cheap inputs but still Ancom derives one third revenue from Malaysia. Clearly there are customers paying for their agrochem.

Just checked their segmental reporting for latest quarters.

The agrochem segment PAT for 2 quarters cumulative already RM20m+

That is equivalent to last FY's agrochem full year PAT.

With commodity prices sustaining at high prices, safe to say the agrochem unit will continue deliver excellent results for coming Q3 and Q4. Assuming the same level of profits for Q3 and Q4, agrochem unit can deliver double the PAT this FY compared to last.

https://www.theedgemarkets.com/article/dataprep-inks-collaboration-s5-systems-tech-partenership

Possible play on NIIS theme?

Dataprep / Iris / ALB (S5) / Ancom

Dataprep up, next is ALB (S5)?

Dataprep up 40% today

https://www.theedgemarkets.com/article/dataprep-inks-collaboration-s5-systems-tech-partenership

Dataprep is partnering S5, announced last October.

ALB (S5) and ANCOM to follow the uptrend soon?

Touched RM1.20 today. Last call for those who want to buy below RM1.20 because after CNY, gonna breakthrough RM1.20 anytime.

By Thursday CNY-eve, Ancom should test new high RM1.20 and Ancom-WB test 60sen.

Momentum still there and going strong.

So, IRIS has announced that it got awarded the RM1.16b NIIS project by Home Affairs Ministry.

What has this got to do with ANCOM?

1) IRIS is awarded NIIS project. As main contractor, it would need sub-contractors to complete different parts of the entire project. And the one of the largest sub-contractors would be S5. More than 50% of project value would flow to S5 (they are already experts in the IT biz relating to MyKad and Immigration etc.)

2) ALB announced the RTO of S5 last year July. But until now, the Share Sale Agreement (SSA) has not been signed. Why the delay?
- everyone is waiting for NIIS to be awarded. why?
- once NIIS awarded, then IRIS as main con can give jobs to S5
- only after securing jobs from IRIS can S5 justify the valuation that it wants (hearsay 800m+)
- only after justifying the valuation, ALB can sign SSA with S5 owners

In a nutshell, ALB will only sign SSA after S5 proves that it will secure xxx amount of the NIIS project value to justify the high valuation of S5.

So, is this good for ANCOM? Of course.

1. RTO can proceed and be completed.
2. Gain from issuing ALB shares to S5 owners at 10 sen when book value is 5 sen.
3. ALB's current biz to be consolidated under Nylex.
4. Further strengthen turnaround story and re-focusing on profitable Agrochem business.
5. Ride along with S5, minority stake to be worth RM50m++ if S5 succeeds in becoming a billion ringgit co.

No surprise which counter is the safest and surest bet among IRIS, ALB, ANCOM.

This the way I see it.

Congrats to holders of Ancom. This is just the start of a turnaround story and we should expect coming quarters to reflect the new profitability too.

More to come as management endeavour to drive Ancom to a RM1b market cap company.

https://www.youtube.com/watch?v=IefV5Bs1UVI

Wow, youtuber who did video on Hextar just covered Ancom. Quite detailed, good for new investors to understand the Ancom story.

If Q2 results is much better than Q1 then turnaround is confirmed. It should then head towards next new high of 1.50 by Q3 results release. My personal investment opinion (have to clarify becos now Bursa strict on investment opinion haha).

Results will release next week. Question is should be wait till results confirmation or take some position? Agrochem and manufacturing sector well in tact for last year MCO period. Factory operate as usual plus commodity like CPO all time high, plantation spend more on chemicals.

My 2 cents.

Usually they announce end of month after the quarterly board meeting, as with most PLC.

Hearsay turnaround is real, be ready for good news.

ANCOM: positive factors for JAN 2021

1) NIIS impending award.
Whoever wins the contract, S5 gets 60-70% of project revenue as main con/back-end support. ALB progresses with Share Sale Agreement with S5. RTO to be completed.

2) AGROCHEM Super Bull Run - CPO rally beneficiary
With Crude Palm Oil prices rallying to RM3,600 and no signs of stopping, Ancom's subsi Ancom Crop Care is a direct beneficiary of high CPO prices as palm oil plantations spend more on estate management to improve yield. Herbicides sales are at all time high even surpassing year 2018-2019 pre-covid.

3) Turnaround in Nylex
Nylex was loss-making past 2 years due to downtrend in Methanol prices. Now that the commodity bull is in full swing, everything from soybean to CPO to Methanol have been appreciating in price. Nylex manufacturing have always been profitable especially Ethanol (for sanitizer). Once trading division turnaround, Ancom will see a positive contribution from Nylex.

Turnaround story may carry the stock to RM1.30++
NIIS award will give a turbo boost of extra 30 sen possibly (refer to when HOA was announced with S5)

Happy New Year and Happy Investing!

Should be closing green later as investors are aware of upcoming rally for Ancom in year 2021.

Definitely keep an eye for Ancom in Jan 2021.

Hello RM1~~~

Any price below RM1 will be considered cheap in 2 weeks' time. Today will be another strong closing because a few big investors have already been briefed on the coming good results and turnaround story.

Discount price for mother share: below RM1
Discount price for warrant: below RM0.40

https://themalaysianreserve.com/2020/12/24/ancom-sees-growth-on-better-agrochemical-active-ingredients-demand/

Strong hints from the management that the agrochem unit would outperform once again.

I foresee another day of closing green, foreign funds started to buy into this regional player with a hidden value of at least more than half a billion worth of the agrochem unit.

Consecutive three days uptrend with increasing volume. Something material coming?

Hextar uptrend on agrochem theme. Ancom the next to follow?

Collection mode now :)

ALB's book value on Ancom's book is only 5 sen, the ex-price should theoretically be adjusted half sen only (5 sen divide by 10). But because Bursa adjusted using market price of ALB (37.5 sen divide 10 = 4 sen), Ancom's price has been over-adjusted by 3.5 sen. This bigger discount offers a good buying opportunity before the next wave up, let's watch and see

The bonus ALB shares shall be credited into your account 4Dec.

Net Assets of 1.89 per share as of latest quarter report. Would expect PNB to accept offer price no less than RM1.89 per share from the buyer. Buyer required to offer GO so to keep the listing status, market price would rally past the offer price to fail the GO.

Plus, CCM's products used by glove co so it would not surprise me if the big glove co bid for CCM from PNB. Imagine if a few of the top glove co bid for CCM, RM2.50 to 2.60 possible.

It was oversold after ex date of warrants early September. Plus political uncertainty so some people who punt Ancom to ride along with ALB have sold off due to impatience. Investors who buy on Ancom's agrochem growth and profitability have been collecting patiently the past month.

Imminent NIIS plus ALB ex date approaching, should be a good boost to this uptrend. Cheers.

I expect a good Q1 results on recovery of overseas market demand and high CPO price for palm oil local demand, minus the media and corporate costs which has already come down.

Plus possible good news on S5/ALB.

Also, big holders of warrants would buy up mother share so their warrants are gonna worth higher.

My own opinion TP RM1.30 in sight.

Cut off for warrant entitlement is 9am today, meaning those who buy yesterday is entitled.

Warrants price will depend on mother price when it gets listed.

4 mother shares entitles you for 1 bonus warrants, exercise price 84 sen.

So taking today's closing price 0.975, the opening price tomorrow should be around 0.945 - 0.95

[ (4 x 0.975) + (1 x 0.84) ] / (4+1) = 0.948

So nothing out of the ordinary if you see opening price adjusted slightly. Steady!!

Warrants will be credited directly to your trading account.

Ex date 9am 4th September.

Meaning last day to buy to be entitled for warrants is 3rd September (Thursday) by 5pm.

Today is 2nd last day.

Last day to buy to be entitled for free warrants is 3 September [Thursday]

Based on exercise price of warrants set at 84sen, it is already IN THE MONEY.

Good show next week.