KUALA LUMPUR, July 29 (Bernama) -- Bursa Malaysia rebounded to close higher on Wednesday on selective buying of defensive stocks after a volatile trading session. IPPFA Sdn Bhd director of investment strategy and country economist Mohd Sedek Jantan said consumer products and services stocks lifted the key index higher, overcoming lingering geopolitical concerns. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 3.08 points to 1,715.56 from yesterday’s close of 1,712.48. The benchmark index, which opened 1.91 points higher at 1,714.39, moved between 1,710.79 and 1,720.59 during the day’s trading. In the broader market, gainers outstripped decliners 550 to 476, while 612 counters were unchanged, 1,129 untraded, and 48 suspended. Turnover rose to 2.96 billion units valued at RM2.48 billion from 2.94 billion units valued at RM2.56 billion on Tuesday.
Key Investment Highlights
1. Strong Position in National Security Solutions
NexG Berhad (NEXG) specializes in secure ID documents and smart card solutions, catering to national-scale, high-security projects. Its customer base includes the Malaysian Passport and National ID divisions, making it a reliable and entrenched player in the government-tech space.
2. New High-Security Facility with RM250m Investment Potential
NEXG plans to build a RM250 million facility to expand into secure document and identity systems production. The project is expected to bring in between USD100m–USD200m revenue per phase and will be financed via a mix of private placement and internal reserves.
3. Strategic Machinery Upgrade and Expansion
The company is investing in a new 30,000 sqft factory in Klang Valley (RM18.4m), alongside machinery upgrades (RM11m), R&D for mobile and anti-fraud systems (RM6m), and IT systems (RM4m). These upgrades are vital to support its expanding order book and strengthen long-term competitiveness.
4. Potential Earnings Upside from Project Wins and Capacity Additions
NEXG is projected to achieve RM106.4m in PATMI for FY2026 and RM119.5m for FY2027. Forward EPS is calculated at RM0.027 (FY2026) and RM0.032 (FY2027), based on 23x PER — a conservative valuation compared to the broader tech and ID solutions sector.
5. Capital Injection with Minimal Dilution Risk
The proposed private placement of 10% of shares could raise up to RM133.7m, supporting project rollout without heavy reliance on debt. Fully diluted estimates reflect this corporate action, with management ensuring minimal earnings dilution and strong return on equity (ROE) of over 29%.
Valuation & Outlook
We believe the upcoming investments into secure ID infrastructure, diversification outside Malaysia, and the scaling of high-margin segments like document encryption and mobile ID platforms will catalyze long-term growth.
With a consistent earnings CAGR and strong project visibility, NEXG is well-positioned for re-rating.
Risk Factors:
Project execution delays
Regulatory risks in public-sector procurement
Dilution from future corporate actions
Conclusion
NEXG is entering a high-growth earnings phase, backed by structural demand for secure digital infrastructure and national ID modernization. With a strong track record and a robust order book, the stock offers both growth and income potential.
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