MyEG Services Bhd’s revenue projection indicates a promising trajectory, with the growth in blockchain business anticipated to offset the decline in transportation revenue.
CGS International (CGSI) Research forecasts a substantial increase in MyEG’s blockchain revenue, expecting it to reach RM143 million or 18% of total revenue by financial year 2024 (FY24), up from 12% or RM90 million in FY23. This growth is primarily attributed to the sales of its Zentrix tokens.
The research firm highlights MyEG’s strategy to issue approximately one million Zetrix tokens quarterly through listed exchanges. Additionally, management anticipates the launch of Malaysia-China ZTrade, a blockchain-based cross-border customs trade solution, coinciding with the 50th anniversary of Malaysia-China diplomatic relations next month.
Furthermore, MyEG’s Zentrix blockchain platform is poised to expand its reach to the Philippines and Indonesia, indicating potential market penetration beyond Malaysia.
In terms of financial projections, CGSI Research anticipates MyEG’s revenue for FY24 to reach RM816 million, with a net profit of RM499 million or earnings per share of 6.7 sen.
The research house predicts a significant decrease in development costs for FY24, expecting it to drop to RM150 million from an annual average of RM460 million in FY22 and FY23, as the current blockchain platform reaches operational readiness.
MyEG’s immigration services segment is also expected to benefit from increased foreign worker hiring activities, particularly driven by the Malaysian government’s initiative to register 2.5 million foreign workers by mid-year.
CGSI Research maintains a positive outlook on MyEG, emphasizing its attractive valuation and sustainable return on equity of 18.8%. Despite potential risks such as non-extension of current concession services and market share loss in ancillary businesses, the research house maintains an “add” call on MyEG.
Key catalysts for potential upside rerating include robust blockchain sales and the acquisition of new concession services from both local and foreign governments.
In conclusion, MyEG’s strategic focus on blockchain innovation signals a proactive response to evolving market dynamics. With promising revenue projections and a strong foothold in immigration services, MyEG stands poised for continued growth and value creation in the coming years.