ANAL YEASTS only looks at the past to deduce the worth and ignoring the future which depends on the qualitative criteria and winds of change in industry. They lack the foresight!
Almost time for Q3 results announcement... since disposal of media last year, likely expect a better Q-o-Q results... TP short term above 90sen hopefully and if glove kaki come join chemical party then RM1 no issue
1. After February Crude oil CRASHED from USD55 to less than USED25
Since cost of feedstock for polymer is so cheap the profits after Feb 2020 will skyrocket up
2. In March 18th Mco lock down started and glove prices spiked. After that face mask stocks spiked
Now sanitizers also spiked With increasing demand for sanitizer the use ethanol spiked leading to Hexza going LIMIT UP AND PRICE DOUBLED 100% FROM 70 SEN TO OVER RM1.40!!!
NOW WE DISCOVERED THAT NYLEX NEWLY EXPANDED FACTORY IN CHUPING HAS INCREASED PRODUCTION OF ETHANOL
SO CHUN CHUN ON DOUBLE BOOSTER FROM NOW ONWARD FOR NYLEX AND ANCOM
We are positive on Ancom Bhd (“Ancom”) prospects and growth trajectory of their agrichemical business. This division contributes over 70% of group’s profit with decent gross margins of over 15%. Its 4-year CAGR is solid of over 25% in revenue and profits. As such, we believe Ancom will see better days in FY21 when its restructuring gains traction. BUY with target price of RM0.90 premised on 12.5x PER FY21 being 2-year average PER and comparable to its peers.
Ancom’s key driver and hidden jewel is their agrichemical business under Ancom Crop Care Sdn Bhd. The other major asset being its 48.95% stake in Nylex Bhd which is in the industrial chemical business that has hit a sweet spot amidst the Covid-19 pandemic. It is experiencing surge in demand for their ethanol production, an active ingredient in sanitisers. Its business of manufacturing hand sanitisers and hygiene and sanitisation services is the new normal in the wake of gradual opening of most business post CMCO. Ancom’s foray into sanitiser production is complementary to their existing business as the margins are fairly lucrative with gross margins ranging between 25-40%.
Core business and hidden jewel lies in their subsidiary Ancom Crop Care Sdn Bhd which contributes over 70% of the profit to Ancom Bhd. Agriculture chemicals which are part of the food supply chain are predominantly used in sugar cane plantation, palm oil plantations. It has reported FY19 net profit of RM35m and is expected to maintain is profitability for FY20 and FY21. This value however is trapped at group level which is undergoing restructuring as their other business has been a drag such as media that realised over RM12m loss for FY19.
Nevertheless, we still expect Ancom Bhd to remain profitable with agribusiness to be the key driver delivering earnings growth via expansion of capacities and new products for the agribusiness coming onstream by FY21. This would catapult group’s earnings and expect growth momentum to continue with EPS to chart double digit growth for FY21 and beyond.
And these are some good points
1) ANCOM 4-Year CAGR is solid of over 25%
2) Seeing better days ahead Rakunten gave a PER12.5 Target Price for Ancom at 90 sen
That is too modest. The Surge in NYLEX will lift up Ancom past Rm1,00 to Rm1.20 possible
3) Ancom owns 48.95% of NYLEX
The other major asset being its 48.95% stake in Nylex Bhd which is in the industrial chemical business that has hit a sweet spot amidst the Covid-19 pandemic. It is experiencing surge in demand for their ethanol production, an active ingredient in sanitisers.
Nylex has Hit a SWEET SPOT in Covid 19 pandemic!
Nylex is experiencing SURGE IN DEMAND for their ethanol production, an active ingredient in sanitizers
So Both Nylex & Ancom will benefit tremendously from the Upward Surge of Demand for Sanitizers
Gloves, face masks & isolation gowns are defensive
Only sanitizer is Offensive
Glove, face mask & isolation gown protect from Covid 19
Temporary correction after hit latest peak....Latest QR not surprise is expected as in trimmed down the loss making business.I put hope for coming QR as in those sanitizers sales shall reflect in coming QR...cheers
agreed. under-appreciated stock. the jewel of their business is prospects and growth trajectory of their agrichemical business. Contributing over 70% of profit with gross margins of >15%, this division is supported by a 4- year CAGR of over 25% in both revenue and profits!
key points from Rakuten:
1) Ancom Crop Care Sdn Bhd made RM35m net profit in FY19 and we expect the Group to maintain its profitability over the next 2 years with agribusiness to be key driver delivering earnings growth with new products to come onstream by FY21.
2) A bright spot amid Covid-19 pandemic as their subsidiaries are experiencing surge in demand which manufactures ethanol, an active ingredient in sanitisers.
There is no reason Ancom will not perform well next quarter. Nylex already shot up and Ancom owns 48.95% of it. They will benefit from the demand of ethanol and sanitizers. They have a well-structured plan to tackle the problems theyre facing too, ie trimming down loss making business like Redberry, reducing dependency of raw materials from china, restructuring. Watch Ancom's group director's interview with 12invest here and you decide. https://youtu.be/VC98pGdCsYc
I think Ancom's going in the direction and has been complimented by the rise of COVID-19 and im stocking up!
Ancom another wave coming soon,say goodbye to those weak holders.Those who are short term players can’t make good return in Ancom bec Ancom is for long term players.Hit n run is like gambling either make or loss.By looking at the volume I assume those who wan to sell shud be clear the position already...Long term investors,let ready and see the rising of Ancom..cheers
Got such report?coz The edge top pick 2020 don’t have Vertice...Anyway,analyst have their own view on particular stock pick.So I’m glad that stock that I invested is part of their Top pick....We need to study the company b4 committed.That is how we classified ourselves as value investors.
During these few days holidays,I did research again on agrochemical business.Myself involved in plantation or agriculture.Check with many local suppliers where a few type of agrochemicals products is shortage in local market,where oversea supplier also can’t source it.It was due to surge in demand by most of the countries.Mayb now each country wan to hav self sustain in food chain instead of import foods frm other countries.So how do u guys think bout Ancom agrochem business sales?I am very positive towards the agrochem sales...Theoretically sales is growth although economic cycle slow down..any comments?
Locus destroy crops in India, so India need to import more. For eg, import more sugar from Brazil.
So Brazil sugarcane will have more demand, higher prices. Which means more money to spend on agrochemicals to manage the plantation better for higher yield.
All in all, as long as there is demand for food, for sugar, Ancom will continue to have demand for its products
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Posted by DickyMe > 2020-05-13 22:18 | Report Abuse
ANAL YEASTS only looks at the past to deduce the worth and ignoring the future which depends on the qualitative criteria and winds of change in industry. They lack the foresight!