KUALA LUMPUR (Feb 14): Hong Leong Investment Bhd (HLIB) Research has initiated coverage of Ancom Nylex Bhd with a “buy” rating at RM1.24 and target price (TP) of RM1.73 and said the group plays a key role in global food security with more than 50 years of track record.

In a note on Tuesday (Feb 14), the research house said it deems the group to be a growing agrichemical powerhouse that is seemingly undervalued.

“After our initial unrated report on Oct 6, 2022, its share price has performed well by about 30%.

“With that, we are converting this stock to a full-on coverage with a 'buy' recommendation and a TP of RM1.73 based on a conservative target P/E of 17 times, at an about 25% discount to its peers’ average P/E multiple of 23 times.

“Ancom raked in a record high core net profit of RM62.6 million in FY2022."

Going forward, HLIB projected the group’s net profit to further grow by 22%, 45% and 18% for FY2023-25 respectively, representing a CAGR of 28%.