PETALING JAYA: My EG Services Bhd’s (MyEG) latest collaboration with the Institute of Industrial Internet and Internet of Things of the China Academy of Information and Communications Technology (CAICT) could be earnings-accretive as early as this year.

       This will depend on when or how soon a commercialisation agreement could be formalised, said MIDF Research.

       “The Xinghuo-Zetrix platform developed by MyEG plays an important role to ensure the success of the Regional Comprehensive Economic Partnership (RCEP).

       “The Xinghuo-Zetrix gateway connectivity will provide a competitive advantage to local businesses, as trade and payment flow in the RCEP enables product authenticity and process efficiency for Malaysian exporters,” the research house said.

       It is positive on the collaboration as it would complement the company’s other commercial service offerings in the immigration, automotive, healthcare and financial services sectors.

       The planned collaboration will see the international extension of China’s national blockchain network Xinghuo Blockchain Infrastructure and Facility (BIF).

       “We raise our revenue and earnings forecast for the financial year 2021 (FY21)/FY22 and FY23 by 6.8%/6.3% and 6.3% upwards, respectively, in anticipation that the lifting of travel restrictions interstate and overseas will allow a pick-up in MyEG’s motorcycle road tax and other new road transport services.

       “Alongside with its blockchain initiatives, we believe its bread-and-butter businesses could cushion its earnings once revenue from its healthcare segment tapers off in 2023,” it said.

       MIDF Research has maintained its “buy” call on MyEG and has rolled forward its valuation base year to FY22, with a revised target price of RM1.22 from RM1.08 before.

       “This is premised on pegging the FY22 earnings per share of 5.8 sen against a forward price-to-earnings ratio (PER) of 21 times, which is the group’s three-year forward average PER,” it said.

       Meanwhile UOB Kay Hian Research (UOBKH) said there were several ways MyEG could monetise this collaboration, moving forward.

       “This includes charging a fee for each transaction on the platform.

       “Zetrix can also charge a fee for tracking each QR code generated in the supply chain traceability, smart financing, power trade traceability, and digital trade applications,” UOBKH said.

       “Other applications like wallets to hold cryptocurrencies such as the digital yuan used in the cross-border trades will also charge transaction fees,” it added.

       MyEG is poised to be a digital asset space frontrunner in Malaysia and UOBKH said this was a positive for the company, especially with the rise in cryptocurrencies and blockchain globally.

       However, any significant earnings contribution will only materialise in the longer term, it noted.

       UOBKH in its note maintained a “buy” call on MyEG with a target price of RM1.32 which is pegged at a 25 times forecast FY21 PER.