MIDF Research said the group’s cumulative results performance came in at the higher end of its expectations, making up 80.4% of its FY23 earnings estimates.
PETALING JAYA: MyEG Services Bhd’s near-term earnings growth will be driven by the groups’ decentralised finance (DeFi) as well as its public blockchain platform, Zetrix, according to analysts.
Maybank Investment Bank (Maybank IB) Research said the company’s DeFi segment would deliver a stronger performance in the fourth quarter of 2023, as management alluded to strong token sales following the October initial exchange offering’s (IEO) success.
“Following the IEO on Coinstore for its token, we forecast that MyEG will be able to sell about five million tokens in 2023, priced at US$5 per unit,” Maybank IB Research said.
The research house added that the increase in cross-border transactions between Malaysia and the Philippines via Zetrix and the platform’s maiden commercial deployment in China would also drive token utilisation further and generate tracking fees for MyEG.
MIDF Research said Zetrix would lift the group’s next phase of earnings growth with organic growth coming from its services.
“This is especially so with the upcoming trade facilitation service with China,” the research house said in its report.
According to MIDF Research, there will be little interruption to MyEG’s revenue generation capability as the group has received an extension from the Road Transport Department for three years, as well as the Immigration Department for two years.
MyEG reported a 19.37% quarter-on-quarter (q-o-q) growth in its revenue to RM194.12mil and a net profit of RM120mil or an earnings per share of 1.6 sen per share for its third quarter ended Sept 30, 2023.
The technology solutions provider has recorded a 13.58% year-on-year (y-o-y) hike in revenue to RM552.22mil and a net profit of RM337.49mil or and earnings per share of 4.5 sen for the quarter, cumulatively over the period of nine months.
Its cumulative net profit was said to be a higher compared with Maybank IB Research and street estimates at 82% for FY23.
Maybank IB Research said MyEGs strong set of results in 3Q23 was attributable to the sales of its flagship Zetrix token which continued to drive growth in the group’s blockchain solutions segment.
The research house also noted that the group’s turnover had seen a 5% q-o-q increase in 3Q23, underpinned by about 30% sequential growth in the DeFi segment contribution.
Maybank IB Research said due to MyEGs workforce downsizing initiative gathering momentum, the group’s core net profit margin and earnings before interest, taxes, depreciation, and amortisation saw further q-o-q upticks by one percentage point (ppt) and three ppt respectively.
The bank-backed research house raised its FY23, FY24 and FY25 earnings by 10%, 7% and 3% respectively, as well as a “buy” call on MyEG with a higher target price of RM1.23 per share.
Meanwhile, MIDF Research said the group’s cumulative results performance came in at the higher end of its expectations, making up 80.4% of its FY23 earnings estimates.
According to the research house, MyEG’s profit margins would remain above 60%, which expanded to 61.8% due to lower operating expenses.
Its revenue in 3Q23 rose 19.4% y-o-y but earnings fell 20.4% y-o-y to RM120mil.
However, its normalised earnings increased 33.2% y-o-y after excluding the one-off gain of RM61.9mil resulting from the listing of its investment in Agmo Holdings Bhd
in 3Q22.
“This was mainly attributed to the contribution from its Zetrix platform,” MIDF Research noted.
