• Overview. 1QFY21 core earnings surged 29% yoy to RM29.1m, breaking its highest ever quarter performance. This was attributable to 1) contribution from new concession services (online renewal motorcycle insurance and road tax (MIRT) and Competent Driving License (CDL)), 2) new commercial services from its Covid-19-related services (MySafeTravel (MST) and MySafeQuarantine (MySafeQ)) and ‘Nak Beli’ online store, 3) increase in online transaction volume on existing concession and commercial services, and 4) increase in contribution from Cardbiz Group.

• Key highlight: On qoq basis, core earnings increased marginally despite 14% growth in revenue. This was due to low operating margin from MST and MySafeQ as well as higher advertising and promotion expenses to promote the services.

• Against estimates: Inline. Overall, 3MFY21 core earnings were broadly inline with ours and consensus’ estimate at 22% and 23% respectively.

• Outlook. We remain optimistic on MyEG's long-term business prospects as we see the growth in transaction volume from its existing concession and commercial businesses to remain, as more users have moved towards online channels due to Covid-19 pandemic.

• Our call. Maintain BUY with RM3.00 TP, pegged at 30x PER on 2021 EPS of 10 sen. We believe this is fair as MyEG continues to expand its concession and commercial businesses further by offering value added services as well as new introduction of services through its digital platform.

Source: BIMB Securities Research - 1 Jun 2021