• Overview. My E.G Services (MYEG) 4Q22 core profit fell by 10.6% YoY to RM74.9mn in tandem with lower revenue during the quarter. This was due to cessation of revenue contribution from COVID-19 health screening and quarantine in 4Q22 and impairment in MYEG’s investment in Agmo Holdings Berhad as a result of mark-to-market practice.

• Key highlight. Notwithstanding that, PAT (excluding impairment loss) grew by 11% YoY to RM91.3mn attributable to 1) the resumption of full operations of E-Services Centers, 2) higher contribution from the foreign worker job matching services, and 3) new contribution from blockchain segment – the sales of Zetrix tokens.

• Against Estimates: Below. Despite registering a 10.1% decline in revenue in 2022 owing to lower demand for the quarantine services, core profit grew by 5.9% YoY backed by lower net operating costs. Overall 12M22’s core profit trailed ours and consensus’ estimate or at 93% and 94% respectively.

• Earnings revision. No change to earnings revision pending further insight from the management.

• Dividend. A final DPS of 1.17 sen was declared (4Q21: 1.03 sen), implying a payout ratio of >100%.

• Outlook. We remain sanguine on MYEG’s business outlook following the full re-opening of international borders which would boost its foreign worker segment. With MYEG’s ventures into blockchain technology, we believe it would be able to offset any downside risks from possible moderation in contribution within the government’s concession/ commercial-concession-related services in the future.

• Our Call. Maintain BUY call with a TP of RM1.22, pegged at 25x PER to 2023F EPS of 4.8 sen.

Source: BIMB Securities Research - 28 Feb 2023