Zetrix token sales set to improve further in 2H23 MYEG’s 2Q23 results were strong, on better-than-expected contribution from its blockchain solutions business. With its flagship Zetrix token set to be listed next month on Coinstore, a SG-based crypto exchange, token sales are expected to pick-up further in 2H23. We have raised FY23-24E earnings by 2-6% and we nudge our TP higher to MYR1.16 (+2%). Our TP is pegged to 20x FY24E PER, at MYEG’s LT Mean; BUY rating maintained.

Maybank IB.

Jordan facility to bolster YTL Power’s prospects
https://www.thestar.com.my/business/business-news/2023/08/28/jordan-facility-to-bolster-ytl-powers-prospects

Blockchain upside could be sizeable

We are seeing decent traction in MyEG’s blockchain development as it enters the
rollout stage for government-related services. In Apr 2023, the group formed a
partnership with GACC to provide a cross-border customs trade solution using
MyEG’s blockchain technology that could enhance the transparency and
efficiency of the customs process. The group is undergoing the pilot run on the
platform, and is on track to go for full commercialisation by 4Q23, according to
management.

The monetisation of the blockchain-based customs platform will come mainly
through the issuance of Certificate of Origin (CO), which is a compulsory
authentication process for all inbound custom trades from Malaysia into China.
MyEG expects to collect a fixed fee for each CO issued, therefore the revenue
upside hinges upon the total volume of inbound trade from Malaysia into China.
Based on the ZTrade website, which is the official portal for the Malaysia-China
cross-border blockchain platform powered by MyEG’s Zetrix, the group is charging
up to Rmb200 per CO submission.

Management expects the Malaysia-China customs process to officially shift to the
new platform this year. Therefore, the group could see an uptick in its revenue
and margins by 4Q23F, the latter due to higher sales mix from the high-margin
blockchain business. Beyond Malaysia, MyEG is also aiming to implement a
similar solution for other SEA countries as part of strengthening the economic
partnership across the Regional Comprehensive Economic Partnership (RCEP)
members. It has already signed agreements with the Philippines Bureau of Customs (BOC) and Cargo Data Exchange Center Inc (CDEC) for a collaboration
to roll out blockchain-based customs clearance and processing services for trade
flows between the Philippines and China. Figure 6 shows the China imports from
several ASEAN countries, which reflects the relative upside revenue opportunity
across ASEAN countries on the blockchain solution. As per management’s
guidance, Malaysia-China currently offers the highest revenue upside as Malaysia
has the highest import value vis-à-vis other countries.

CgsCimb 25/8/2023

Zetrix advancing into deep monetisation stages. Zetrix’s potential is gaining more clarity
as the blockchain platform is on track to be integrated into China’s and the Philippines’
customs, with the China blockchain services targeted to be commercially launched in Oct
23. The key scope of services includes the issuance and authentication of the certificate of
origin (COO), smart contract information verification and blockchain-based digital signing.
We anticipate more Zetrix token sales in the upcoming quarters as the customs project are
commercially launched and start generating transaction fees and gas fees which are settled
with Zetrix tokens.

Zetrix’s planned soft ICO should gain good traction. We understand that Zetrix’s initial
coin offering (ICO) would feature in a high-tier over the counter (OTC) exchange in Sep 23,
and we anticipate good subscription rates for Zetrix. We retain our assumption of 2023 token
sales at 5.5m Zetrix coins @ USD5/coins (estimated 1H23 sales: c.2m coins).

UOB KayHian 22/08/2023

MyEG 2Q net profit up 25%; declares 0.25 sen dividend
https://theedgemalaysia.com/node/679491

Malaysia has drawn RM76bil in data centre investments in just over two years, says Tengku Zafrul
https://www.thestar.com.my/news/nation/2023/08/10/malaysia-has-drawn-rm76bil-in-data-centre-investments-in-just-over-two-years-says-tengku-zafrul

LHDN: E-invoicing will be implemented in 1H 2024
https://www.thesundaily.my/business/lhdn-e-invoicing-will-be-implemented-in-1h-2024-ED11309805

All bodies that involve in Import/Export documentations & financing for Asean & RCEP countries with China, i.e Importers, Exporters, Shipping Co, Logistic Co, Insurance Co, Banks, Customs. International Commerce Dept, Health Dept...etc, need to subscribe to blockchain Ztrade service.

MyEG ‘exports’ its Ztrade solution to the Philippines
https://www.thesundaily.my/business/myeg-exports-its-ztrade-solution-to-the-philippines-ML11292824

MyEG deploys Ztrade app for Philippines-China trade flows
https://theedgemalaysia.com/node/676298

Govt to provide up to RM5b in loan schemes to facilitate first-home purchases
https://theedgemalaysia.com/node/676244

Datasonic appoints Agong’s son-in-law Tengku Abu Bakar as executive chairman
https://theedgemalaysia.com/node/676211

BIG Pharmacy to acquire Caring Pharmacy from 7-Eleven Malaysia for RM900 mil — sources
https://theedgemalaysia.com/node/675550

BFood acquires 1.07% interest while BLand increases stake in 7-Eleven
https://www.edgeprop.my/content/1905549/bfood-acquires-107-interest-while-bland-increases-stake-7-eleven

Blockchain: Constructing Southeast Asia’s Digital Silk Road
https://theedgemalaysia.com/node/673986

All-time best reactions to holes-in-one on the PGA TOUR
https://www.youtube.com/watch?v=UelN22v1EwM

Datasonic likely to benefit from surge in applications for passports
https://www.thestar.com.my/business/business-news/2023/07/20/datasonic-likely-to-benefit-from-surge-in-applications-for-passports

Global Data Centre Growth Unperturbed By Energy Constraints
https://www.businesstoday.com.my/2023/07/19/global-data-centre-growth-unperturbed-by-energy-constraints/

Main Market-bound MST Golf says its valuation is justified by its established branding, regional expansion plan
https://theedgemalaysia.com/node/675130

TA Securities values Main Market-bound MST Golf at RM1.20 a share
https://theedgemalaysia.com/node/673624

Vestland clinches RM93m contract to build apartments in Shah Alam
https://theedgemalaysia.com/node/675121

MST Golf optimistic over expansion plans
https://www.thestar.com.my/business/business-news/2023/07/17/mst-golf-optimistic-over-expansion-plans

Oppstar signs MOU to look into developing integrated circuit products in China
https://theedgemalaysia.com/node/674766

T7 Global's TSeven Elise facility commences production at Bayan field
https://www.thestar.com.my/business/business-news/2023/07/12/t7-global039s-tseven-elise-facility-commences-production-at-bayan-field

Main Market-bound MST Golf’s IPO attracts RM924 mil interest from institutional investors
https://theedgemalaysia.com/node/674403

My EG Services (MYEG MK)

Dust Settling; Immigration Concession Not Losing Relevance

Last Friday, MYEG’s immigration concession was extended by the Ministry of Home
Affairs, officially putting an end to earlier misgivings that the group is losing relevance
within the Malaysian e-government domain. We expect investors’ confidence to be
gradually restored, while risk-reward is highly appealing at this juncture with heavily
discounted valuations, an impressive earnings track record and unchartered potential
of the Zetrix blockchain. Maintain BUY and target price of RM1.18.

UOB KayHian July 10, 2023

MN Holdings unit secures underground utilities contract worth RM11.2 mil
https://theedgemalaysia.com/node/673800

ITMAX secures RM40 mil hospital services job
https://theedgemalaysia.com/node/673389

MN Holdings bags RM13.1mil ECRL contract
https://www.thestar.com.my/business/business-news/2023/06/30/mn-holdings-bags-rm131mil-ecrl-contract

GHL poised to register stronger growth in second half of the year
https://www.thestar.com.my/business/business-news/2023/06/26/ghl-poised-to-register-stronger-growth-in-second-half-of-the-year

Cloudpoint Appointed Reseller For Identity Software By Ant Group Digital
https://www.businesstoday.com.my/2023/06/23/cloudpoint-appointed-reseller-for-identity-software-by-ant-group-digital/

GHL Systems provides Alipay+ payment to over 2,600 local biz in Thailand
https://theedgemalaysia.com/node/671868

Perodua offers new Axia variant at "Rahmah" price
https://www.nst.com.my/business/2023/06/920370/perodua-offers-new-axia-variant-rahmah-price

Betamek partners with China-based company to venture into Asean auto industry
https://theedgemalaysia.com/node/671285

MyEG, UM to include AI technology in collaborative research with China
https://www.thestar.com.my/business/business-news/2023/06/14/myeg-um-to-include-ai-technology-in-collaborative-research-with-china

Shaping a Brighter Future Through Blockchain
https://www.businesstoday.com.my/2023/06/14/shaping-a-brighter-future-through-blockchain/

Blockchain: A Game Changer For Financial Inclusion, Poverty Alleviation
https://www.businesstoday.com.my/2023/05/30/blockchain-a-game-changer-for-financial-inclusion-poverty-alleviation/

TP upgraded from 2.28 to 2.53 by UOB

Oppstar closed the year with a record-high profit of RM21.4m (+29% yoy) which
transcended our/consensus expectations by 5%/6% respectively. We see enormous
growth opportunities that can supercharge a three-year revenue/core net profit CAGR of
36%/37% from FY23, premised on aggressive expansions, cutting-edge R&D and
technology knowhow alongside huge untapped potential augmented by Malaysia’s
geopolitical neutrality. Maintain BUY with a higher target price of RM2.53.

• Aggressive expansions to capture sea of opportunities. Note that out of the gross
proceeds of RM104.3m, Oppstar has earmarked RM50m for the expansion of its workforce
to: a) support its existing and potential customers, and b) continue developing its human
resource capabilities, thereby ensuring its long-term sustainability. Eventually, Oppstar aims
to achieve this by increasing its total workforce by 280, comprising design engineers (locals
or expatriates from India and Indonesia) for IC design and engineers/technicians for postsilicon
validation services, to be based in Penang and Kuala Lumpur. The increase is
expected to happen over 36 months.

• Strong orderbook backlog. It is noteworthy that the group has received enquiries from
existing and potential customers from different regions for both specific design services and
turnkey design services, with the enquires possibly requiring up to 200 design engineers. As
at end-Jan 23, Oppstar’s orderbook stood at RM34.3m, mainly consisting of turnkey design
services to be delivered in the next 12 months.

• Forecasting a three-year revenue/core net profit CAGR of 33%/35%, on the back of
assuming: a) higher revenue per engineer on an hourly basis, b) progressively higher
utilisation rate on increasing available vs billable time, and c) progressively higher headcount
of design engineers towards FY25. Note that the group’s headcount stands at 169 as of
FY22 with utilisation rate of 89.8% in terms of available vs billable time basis. The group has
earmarked RM50m for the expansion of its workforce to: a) support the needs of its existing
and potential customers, and b) continue developing its human resources capabilities,
ensuring its long-term sustainability.

UOB KayHian 30052023

TP 1.18 by UOB

• Zetrix still on track to unveil its tremendous earnings potential... We conservatively
incorporate Zetrix’s profit before tax (PBT) contributions to MYEG at only RM54m for 2023,
which is mainly derived from the token sales (assumptions: 5m Zetrix coins issued in 2023 at
US$5/coin), with modest contributions from gas fees for the various applications on the
Zetrix platform, such as the Blockchain-based Identifiers (BID)/Verifiable Credentials (VC)
and Blockchain-based e-signing services, Zetrix TradeFi and China’s custom express
clearance programme (targeting commencement in Mar 23).

• …as the Xinghuo International Supernode goes live. Yesterday, MYEG’s announced the
successful live deployment of the Xinghuo Supernode with the launching of Xinghuo Beta
Name System and Xinghuo Digital Identity Service (MYEG owns and operates the Xinghuo
International Supernode via its Zetrix platform). The rollout of the identity service runs
parallel with Chat GPT founder Sam Altman’s Worldcoin’s project that incorporates such an
identifier World ID protocol to authenticate humans online.

• Tremendous potential with the planned ICO of Zetrix tokens in Hong Kong. MYEG
continues to target to launch an initial coin offering (ICO) of Zetrix in a Hong Kong endorsed
crypto-exchange sometime in Jun-Jul 23. Recall that MYEG plans to issue up to 200m Zetrix
tokens annually for five years, provided that Zetrix trades at a minimum of US$5/unit. If
successful, the ICO plans could create a whopping annual ICO proceed of US$1b for the
next five years. Such a potential is hardly reflected in MYEG’s stock valuation.

EARNINGS REVISION/RISK
• None, although we acknowledge that MYEG could trounce our forecast given the potential
of its blockchain businesses.

VALUATION/RECOMMENDATION
• Maintain BUY with an SOTP-based target price of RM1.18, which implies 22x 2023F PE
(-0.5SD below five-year mean). Near-term event catalysts include launching of Zetrix’s
cross-border project with China’s custom, Zetrix’s ICO, potentially deepening its role in
immigration services, and listings of mature start-up investments.

UOB KayHian 31052023

Vestland's unit bags RM170mil design, build contract
https://www.thestar.com.my/business/business-news/2023/05/30/vestland039s-unit-bags-rm170mil-design-build-contract

MyEG posts 1Q net profit of RM105.94mil
https://www.thestar.com.my/business/business-news/2023/05/30/myeg-posts-1q-net-profit-of-rm10594mil

MyEG, Zetrix plan Q3 rollout of blockchain trade facilitation link with China
https://www.thesundaily.my/business/myeg-zetrix-plan-q3-rollout-of-blockchain-trade-facilitation-link-with-china-CD11039496

HLIB Research is optimistic about YTL Power's prospects
https://www.nst.com.my/business/2023/05/913506/hlib-research-optimistic-about-ytl-powers-prospects

MN Holdings sees sustained growth momentum
https://www.thestar.com.my/business/business-news/2023/05/26/mn-holdings-sees-sustained-growth-momentum

RHB 20 Jewels 2023 Edition - Fair Value RM0.68 - 0.82

Report dated 16/5/2023

RHB 20 Jewels 2023 Edition - Fair Value RM0.52

Report dated 16/5/2023

Commentary Of Prospects

The spike demand of the ICT products including smart phone during the COVID period has created slow demand of the ICT products in the past 9 months. Despite of the slowdown of the semiconductor market globally, the Company has experienced a steady increase in the demand of the chips for the industrial applications. The demands for Internet of Things and Artificial Intelligence for automotive, medical, computers and communication are strong. Companies are back to business as usual and investing in digitalizing and automating their operation to the next level. The Company has announced a total of RM70M of projects since November 2022 and the outlook is good for the foreseeable near future. The Group sees stronger demand in AI chips for different applications and increasingly strong demand for IOT and high precision sensor chips and power devices for various chargers. The Group is well positioned to capitalize on this growing demand.

The group having a net cash of 22 million.

Quarter 2 Feb 2023 Report dd 27 April 2023

Kronologi proposes one-for-five bonus issue of shares and warrants
https://www.theedgemarkets.com/node/664748

Kronologi rides wave of growing cloud demand.

Ace-Market listed data storage and cloud specialist Kronologi Asia Bhd, whose operations in China count Baidu Inc as a client, reveals that it is in talks with Amazon Web Services (AWS), Alibaba Cloud, Tencent, Ping An Cloud and Microsoft Azure to offer them its enterprise data management (EDM) services - The Edge Malaysia April 24, 2023

GHL diversifies into micro lending, supports BNPL
https://www.theedgemarkets.com/node/662790