AmInvest has set a fair value of RM1.43, whilst Hong Leong has set a target price (TP) of RM1.73, unchanged from their previous revisions.
Kenanga Investment Bank Bhd, meanwhile, has maintained its “overweight” call on Ancom, setting a TP of RM1.80.
In a research note today, AmInvest said Ancom’s earnings have come within expectation, accounting for 74% of its 2023 financial year (FY2023) net profit, but making up 78% of consensus estimates.
Ancom posted a net profit of RM16.36 million for the third quarter ended Feb 28 (Q3 FY2023), an 8.05% hike year-on-year (y-o-y).
However, revenue fell by 5% y-o-y to RM484 million from RM510 million in Q3 FY2022. AmInvest said this resulted in its Q3 FY2023 core net profit decreasing by 2% to RM15.9 million from RM16.1 million in Q3 FY2022.
It said the quarter-on-quarter (q-o-q) fall in net profit and revenue in Q3 FY2023 was due to weaker contributions in the agrichemical (-24% q-o-q) and industrial chemical (-10% q-o-q) segments.
The agricultural segment faced lower average selling prices (ASPs) amid lower crude oil prices and weaker global economic activities.
Notably, industrial chemical earnings before interest and taxes improved by 16% q-o-q, mainly driven by a greater contribution from higher margin manufacturing segments, particularly the ethanol segment.
AmInvest said: “Going forward, we expect the agrichemical segment to be slightly weaker in Q4 FY2023 due to lower sales volume which could be impacted by crop prices.
“However, the industrial chemicals segment should be stronger on higher ASP and stable sales volume, based on our unchanged oil price forecast of US$80-US$90 (RM354.52-RM398.83) per barrel for 2023,” it added.
On the contrary, HLIB expects a strong showing from Ancom Nylex in Q4 FY2023 due to the upcoming rollout of its new product Chemical T, and its sales volume backlog.
The research houses added that Ancom is “on track for a record-high performance in FY2023”.
Kenanga added that the expanding capacity for the production of MSMA-related products at its Shah Alam plant, and Ancom’s rising market share in Thailand underpinned by the phasing out of paraquat, a herbicide, will boost growth prospects in 2023.
Risks for Ancom going forward included a downturn in crop production, and foreign exchange translation, Kenanga said.