• Overview. My E.G Services (MYEG) 3Q22 core earnings (ex-EI from the fair value gain of investment amounting to RM61.9mn as a result  of the listing of MYEG’s investment in Agmo Holdings Berhad (Agmo)) grew by 13.4% YoY and 0.3% QoQ to RM88.9mn despite reporting an  almost flat revenue growth (+3.7% YoY, +0.5% QoQ).

• Key highlight. EBITDA margin climbed to a record high of 69% (+10- ppts YoY, +2.8ppts QoQ) attributable to MYEG’s higher margin  business driven by the increase in existing concession and commercial  business following the resumption of full operations of MYEG’s EService Centers nationwide, higher contribution from foreign worker  job matching service, and the sales of Zetrix tokens.

• Against Estimates: Inline. Though MYEG reported a marginal decline in 9M22’s revenue (-0.8%) due to lower demand for the quarantine  services, core earnings jumped by 10.3% to RM259.4mn however  thanks to better margin business as mentioned above. Overall 9M22’s  core profit was broadly in line with our and consensus’ estimates,  accounting 72% of our full year forecast.

• Outlook. We remain upbeat on MYEG’s outlook following the full  reopening of international borders and hence, a solid outlook for the  foreign worker segment. We are also positive on MYEG’s ventures in the blockchain technology given its huge potential in the future.

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

Source: BIMB Securities Research - 30 Nov 2022