Sunday 04 Jun 2023
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KUALA LUMPUR (Jan 27): MyEG Services Bhd is optimistic that the e-government service concession, slated to expire this May, will be extended for another three years due to its strong track record. 

Maybank Investment Bank, in a note on Friday (Jan 27), maintained its "buy" call on the stock with an unchanged target price of RM1.37, saying the group’s last extension for the concession was received in May 2020 for three years. 

The research house also noted that MyEG has onboarded three banks for the pilot test of its supply chain financing solutions through the Zetrix platform. 

This follows the MoU with Mimos Technology Solutions Sdn Bhd to develop the national blockchain infrastructure. 

On the China front, Maybank IB, citing the republic’s central bank, said the traction on digital yuan utility has been relatively gradual, with a cumulative circulation of digital yuan hitting 13.6 billion, or 0.13% of total yuan in circulation as of end-2022. 

“We believe adoption of this digital currency could rise further in the future, given its greater efficiency, low-cost and traceability attributes vis-à-vis traditional money,” it added. 

The house said the adoption of digital currency could drive revenue growth for MyEG. Thus, it has projected 4%-11% of the group’s revenue in FY23/24 to come from this business, mainly through the sale of Zetrix tokens. 

Meanwhile, Maybank IB said MyEG is also planning to distribute its entire 25.8% stake (84million shares) in Agmo Holdings Bhd (Not Rated, current price: 73.5 sen) as dividend-in-specie in two tranches (69.75 million shares in Feb 2023, 14.25 million shares in Aug 2023).

The research firm said the distribution would provide exposure to Agmo’s digital solutions businesses and supplement its projected FY23E dividend per share (DPS) of 1.5 sen, based on circa 30% payout ratio assumption.  

“We also see this as a way for MyEG to preserve its capital to fund the development of its new businesses, whilst enhancing shareholders’ returns through dividends,” it added.  

Maybank noted the downside to its projection includes weaker-than-expected earnings and margin delivery, stiffer competition in the e-government services space, weaker domestic economy, prolonged closure of borders, and any regulatory hurdles in relation to new product initiatives.  

MyEG shares traded flattish at 90 sen in early trade, implying a market capitalisation of RM6.69 billion. 

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