My E.G Services (MYEG) kicked off its 1Q23 financial performance strongly after core profit jumped by 41% QoQ and 29% YoY to RM105.7mn despite only a slight increase in revenue (+5% QoQ, +7% YoY) driven by MYEG’s high-margin business across its services. EBITDA margin expanded by 15.4 ppts QoQ and 13.6 ppts YoY to 73.5% in 1Q23. Overall, MYEG’s 1Q23 was in line with our and consensus estimate, accounting 26% and 27% of the full year forecast, respectively. We remain optimistic on MYEG business prospects driven by the reopening of international borders, a catalyst for its immigration-related services. Furthermore, MYEG's ventures into the blockchain technology offer a promising opportunity to mitigate potential declines and risks in government concession/commercial-concession-related services in the future. Maintain a BUY call on MYEG with TP of RM1.15, pegged at 21x PER to 2023F EPS of 5.5 sen.
Source: BIMB Securities Research - 31 May 2023
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