PETALING JAYA: MyEG Services Bhd’s earnings are expected to be buoyed by the investment it has made in its Web-3 based web technology, according to Maybank Investment Bank Group (Maybank IB).
The research house said the e-government services provider is potentially providing a new service via its Web-3 based solutions that entails the recruitment and registration of foreign workers in Malaysia.
“Amid issues surrounding the development of the National Integrated Immigration System, we believe MyEG is in a good position to further continue its immigration-related services in the coming years.
“At roughly 600,000 processed foreign workers per annum, this could potentially become a new source of revenue for MyEG as part of the continuous innovation and improvement on the existing system,” said Maybank IB.
The research outfit added that MyEG’s job-matching business is expected to perform better, on the back of a pickup in hiring activities of foreign workers.
The group is also coming up with a new solution for the Malaysia-China customs following the pilot stage of supply chain financing.
“The custom process could migrate to the more efficient and transparent Web-3 based system, thus benefiting MyEG, as it is able to monetise its platform through increased utility and volume,” said Maybank IB.
Moreover, while MyEG’s roadtax and competent driving licence (CDL) renewal businesses may be affected with the Transport Ministry’s plans to digitalise its system, the group stands to provide new blockchain-based solutions for the Land Transport Department.
“We have adequately reflected the estimated decline in its roadtax and CDL renewal market share across the financial year 2023 (FY23) to FY25, from about 40% in FY22 to roughly less than 10% by FY25. All in all, we have pencilled in a 4%,12% and 17% revenue mix to come from blockchain from FY23 to FY25, respectively,” said Maybank IB.
Maybank IB maintained a “buy” call on MyEG with a target price of 90 sen, underpinned by upside factors like the extension of the pioneer tax status and stronger-than-expected earnings delivery/scale-up.
“The potential revival of the goods and services tax (GST) will benefit MyEG’s GST-monitoring business. Effective execution of decentralised finance products in both Malaysia and regionally will also bode well for the group,” said the research house.
Nevertheless, Maybank IB also factored in risks related to the issues of foreign worker recruitment, capital expenditure allocation and concessions with the government.
“The risk factors include prolonged unresolved foreign worker recruitment in Malaysia as a result of lacklustre demand to work in Malaysia, higher-than-expected capital expenditure required to further develop the Zetrix blockchain infrastructure, as well as discontinuity of its concession with the government to provide e-government IT services,” said the research house.
