AmInvestment lauds Ancom Nylex’s acquisition of Green Lagoon, maintains ‘buy’ call over ESG ambitions

KUALA LUMPUR, April 24 — Chemicals manufacturer Ancom Nylex Bhd has announced its bid to acquire homegrown environmental solutions company Green Lagoon Technology Sdn Bhd (GLT) for RM120 million.

The move will be done through its subsidiary Ancom Logistics Berhad (ALB), in which it owns 34 per cent stake, the group said in a statement.

“This strategic move supports Ancom Nylex’s goal of achieving full decarbonisation by 2025, underscoring its commitment to environmental responsibility,” the group said in a statement.

Formed in 2010, GLT specialises in the design, construction, operation and management of biogas plants, effectively transforming waste into valuable resources.

Advertisement

Following the announcement, AmInvestment Bank said it is maintaining its “buy” call on Ancom Nylex with a higher fair value (FV) of RM1.28 per unit share, up from RM1.26 per unit previously.

Although it said there was no FV adjustment related to environmental, social, and governance (ESG) issues, this could be raised when ALB acquires GLT.

According to AmInvestment, GLT had undertaken over 60 projects across Malaysia and Indonesia, making it a leading biogas developer in Malaysia by 2022.

Advertisement

It said Ancom’s interest in the acquisition stems from its desire to expedite its ESG goals, gain ownership of a profitable associate, and capitalise on synergies between GLT and its extensive network of oil palm planters.

In its report, the bank said the move can lead to Ancom advancing its ESG roadmap by almost completely de-carbonising within a year of the acquisition, owning a profit-generating associate is better than an operation currently just barely breaking even, and capitalising on the synergies between GLT and Ancom, which has a large network of oil palm planters.

The report said ALB’s acquisition is set to cost RM120 million, to be achieved by issuing 1 billion new ordinary shares at RM0.12 per unit to GLT shareholders — which would result in Ancom Nylex’s share in ALB diluted from 34 to 21 per cent.

This comes as the bank expects Ancom Nylex’s agrichemicals segment in the 2025 financial year to benefit from trade diversions (especially timber preservatives) by multinational corporations from China to Ancom, shift in demand from expensive patented herbicides to cheaper generic versions amid an expected global economic slowdown, and commercialisation of the group’s Product T in the second half of the year.

By integrating GLT’s expertise, Ancom aims to actively manage the impacts of climate change, reduce its carbon footprint, and explore alternative energy sources. GLT’s specialisation in biogas plant design and management aligns with Ancom’s commitment to emissions management and sustainability.

One key aspect of Ancom’s ESG strategy is the reduction of water usage. By minimising, monitoring, and recycling water at both company and site levels, Ancom targets a 5 per cent reduction in water consumption within one-year post-acquisition.

It also plans to reduce electricity intensity by 2 to 3 per cent, implement initiatives to control effluent pH discharge and utilise carbon filters to mitigate odour and colour from waste.

Established in 1969 as Ansul (Malaysia) Sdn Bhd, Ancom Nylex is a diversified group with businesses in agricultural chemicals, industrial chemicals, chemical logistics, amongst others and has been listed in the Main Market of Bursa Malaysia Securities Bhd since 1990.

It is the sole manufacturer of herbicide active ingredients in South-east Asia and one of the only two key manufacturers of ethanol in Malaysia.