• Maintain BUY with a revised TP of RM1.34. MyEG Services Berhad (MyEG) posting an all-time high revenue and core PATAMI of RM242.3mn (+31% YoY) and RM165.8mn (+48% YoY) for 2QFY24. This strong performance was driven by heightened demand for Zetrix tokens, following the increasing range of services being rendered by its blockchain platform, such as ZCert – a digital qualification which allows Chinese citizens to digitize their ID cards and driving licenses for use when traveling abroad. On a QoQ basis, both revenue and PAT for 2QFY24 increased marginally by +4.0% and +5.8%, underscoring the continued momentum of its growth. As a result, we are maintaining our BUY recommendation, while raising our target price to RM1.34 (from RM1.21), following an upward revision of our earnings forecast. Our TP is based on a 5-year average forward PER of 16x applied to FY24F EPS of 8.4sen.

• Key highlights. MyEG’s 6MFY24’s core PATAMI of RM324.8mn (+49% YoY) was above both ours and consensus estimates at 58% and 55% of full-year forecasts, respectively. Notably, MyEG’s revenue from contracts with customers outside Malaysia more than quadrupled, rising from RM33mn to RM162mn, highlighting the growing international traction of its blockchain offerings.

• Upward revision in earnings forecast. In light of the stronger than expected performance and the rise in Zetrix token price (which has more than tripled from USD5 to USD17 – see Chart 1), we have revised our earnings estimates for FY24F/FY25F/FY26F upwards by 12%/10%/6% respectively.

• Outlook. Looking forward, we believe that MyEG is well positioned to maintain its growth trajectory by leveraging the emerging technologies. Following its recent strategic alliance with MIMOS Berhad, Worldcoin Foundation and Tools for Humanity to revolutionise Malaysia’s Blockchain Infrastructure and Digital Ecosystem, we anticipate the introduction of more innovative services via Zetrix, both domestically and internationally.

Source: BIMB Securities Research - 21 Aug 2024