PETALING JAYA: MyEG Services Bhd (MyEG) will be able to expand the monetisation avenues for its blockchain segment with the introduction of verification services for China-issued Certificates of Origin (COOs).
In a report, Maybank Investment Bank (IB) Research noted that the new development would complete the two-way coverage for the verification of COOs for MyEG’s ZTrade, an app built in-house on its tier-1 Zetrix blockchain platform, in relation to the trading of goods between Malaysia and China.
The brokerage added MyEG would benefit from Malaysia-China trade growth.
“For outbound trade to China, we understand that each COO is priced at 200 yuan (RM130), with the option for a bundle plan (five COs at 750 yuan) also available to Malaysian exporters,” Maybank IB Research said.
It pointed out that China has been Malaysia’s largest export partner for 15 consecutive years and accounted for the lion’s share of Malaysia’s cross-border trade in 2023 at 17%. In 2023, Malaysia’s exports to China totalled RM192.1bil.
Last week, MyEG announced that ZTrade would expand its scope of coverage to now include verification of COOs issued by China’s customs authority.
Launched on June 27, Ztrade’s coverage scope was initially limited to the verification of digital COOs issued by the Malaysian customs authority, mandatory for all outbound trade of local goods to China.
“We have yet to impute for potential earnings accretion from ZTrade into our forecasts, as cross-border trade volume is harder to ascertain (versus publicly available trade value statistics),” Maybank IB Research said.
“Similar to its other blockchain segment product offering (sale of Zetrix tokens), we expect MyEG’s ZTrade’s net operating margins to be around 95%,” the research house added.
Maybank IB Research noted Zetrix token sales alone, with average selling price assumption of US$15 per token, is expected to contribute around RM270mil to MyEG’s turnover in 2024.
Maybank IB Research maintained its “buy” recommendation on MyEG, with an unchanged target price of RM1.68 pegged to 20 times forward earnings.
The brokerage said the counter is one of its top picks in the Malaysian software space.