1993 WAS ASIAN TIGER BULLRUN, 2020 IS HEALTH CARE BULL RUN BY COVID 19, GLOVE, FACEMASK & NOW SANITIZER IN NYLEX & ANCOM, Calvin Tan Research
May 14, 2020 By Calvin Tan Smart Investment
Hi Guys
It’s getting more and more exciting by the day and by the trading hour!
Yesterday Many Glove Stocks & Facemask stocks and Nylex (4944) the new found Etyhanol stock for Sanitizer hit the 30% limit up Ceiling & then dropped back!!
Since The HealthCare Stocks of Gloves Have Hit The Roof the pent-up fully charged Bull now move into the Face Mask stocks like Prolexus, MTag & Adventa.
In the progression Sanitizer Stocks Have Emerged & Now in Play
Led by Hexza into Limit Up first because of its Ethanol for Sanitizer
Now newly Discovered Gem Nylex has joined in the bull run as Nylex, too, has been found out to have the FermPro Factory in Chuping, Perlis producing Large Quantities of ETHANOL which is the Raw Material for SANITIZER
Since Nylex bull is still young can still get on board while still cheap as it still has potential for further upside
Now the Next Laggard is ANCOM (4758)
And these are the Salient Features of ANCOM
1) ANCOM owns 47% of Nylex shares. So if Nylex goes up the Biggest Beneficiary will be ANCOM
Nylex going up will gradually pull up the share price of Ancom as well
So buy Ancom to ride on Nylex bull
2) While Nylex subsidiary FermPro produce Ethanol from Sugar it is Entopest the subsidiary of Ancom that convert Ethanol into Sanitizer
See fermpro
https://www.nylex.com/docs/industrial/FEM.pdf
See entopest
Entopest is modelled after rentokil
So they complement each other in the synergy of the Sanitizer Growth
Testerday Rakunten did a write up on Ancom
And we quote
ANCOM [4758]
🔹Businesses:
Petrochem – 47%-owned Nylex Bhd
Logistics – 46%-owned Ancom Logistics Bhd
Miscellaneous – media advertising, education, IT etc.
Agrochem – 100% subsidiary Ancom Crop Care Sdn Bhd (ACC)
🔹Crown jewel of Ancom: ACC
the most profitable company within the group
🔹ACC is the only agrochem manufacturer producing Active Ingredients (AI), as well as formulating own AI into proprietary cocktail products. The other listed agrochem co such as Imaspro and Hextar are formulators, i.e. need to source AI from China to be formulated in Malaysia.
🔹High barrier of entry: ACC’s manufacturing site is approved by EPA, Environmental Protection Agency of USA. This gold standard for manufacturing not only allows ACC to sell into US market, but greatly improves its penetration into other markets.
🔹Long gestation period: each product needs to be registered with relevant authorities of each country before being allowed to enter. In Malaysia, average registration period with Pesticide Board is 1.5 to 2.5 years. The longest registration that ACC had experienced was 7 years for Brazil market. Since being established in 1969, ACC owns more than 50 registrations across 40 over countries.
🔹ACC’s new target markets would be Central Asia, registrations ongoing.
🔹ACC’s products primarily serve major crops such as palm oil , sugarcane, cotton, and timber. Main users in Malaysia (33% of ACC’s revenue source) are big plantation players such as FGV, IOI etc. Brazil is ACC’s second largest market out of Malaysia, at 13% of ACC’s revenue due to Brazil having the largest hectarage of sugarcane in the world.
🔹Dominance in niche market: ACC specializes in molecules that have niche markets. Each of ACC’s active molecules command between 40-50% of world market share, which shows an oligopolistic situation.
🔹ACC plans to increase product portfolio from 4 AIs to 8 AIs where new AIs command even more premium pricing due to lack of supply in world markets.
🔹Financial performance of ACC has grown tremendously over the past 4 years. Over 4 years, revenue jumped from RM100m to RM300m, PBT from RM18m to RM47m last year, historical high. Growth was led by current MD of ACC, Mr Lee Cheun Wei, also the Group CEO of Ancom.
🔹Overall group performance was affected by Nylex’s results over past 2 years as the trading division suffered losses due to downtrend of oil prices and world oversupply of methanol. With uptrend in oil prices, Nylex is expected to recover and normalize to past profit levels of RM20-30m annually.
🔹Majority stake in loss-making media unit has been sold to listed Thai company VGI, a RM10billion market cap co. Going forward, financing and operations of media unit shall be lead by VGI. Ancom retains a minority 30% interest which may hold value in successful turnaround of media biz.
In a nutshell, disposal of loss-making media unit and normalization of Nylex’s trading division, will allow the true colors of ACC to shine and be reflected in the group results going forward.
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