Good afternoon all,

After attending EG’s management briefing, here’s our quick takeaways.

📌 EG’s management expects no material impact on the Group from recent US FCC regulatory developments, supported by EG’s ongoing exclusive manufacturing and technology-transfer partnership established directly with CIG US, a US-domiciled entity, back in 2022.

📌 Since October 2022, EG has served as CIG US’s exclusive worldwide strategic manufacturer for 5G optical modules. CIG US continues to experience strong operational momentum, supported by ongoing tailwinds in the AI sector.

📌 Meanwhile, the heightened US FCC regulatory scrutiny on Chinese entities is prompting other direct US customers to actively seek manufacturing alternatives with EG, further solidifying the Group’s positioning within the China+1 supply chain transition.

📌 Additional updates that we got from the management include:
- EG successfully passed the full-process manufacturing audit for 1.6T optical modules, utilizing new NPO (Non-Package / Near-Package Optics) technology.
- The Group is expanding the second floor of its PG2 facility with 20 new automated production lines, boosting overall manufacturing capacity for optical modules by 4X. Trial runs are scheduled to begin in September, with commercial mass production expected by December 2026, catering to 800G and 1.6T optical module.

📈 Our View: We remain optimistic about EG's prospects as its direct partnership with CIG US (a US-domiciled entity) insulates the Group from ongoing US-China geopolitical and regulatory headwinds. Consequently, we leave our net profit forecasts unchanged at RM110.94m for FY26 and RM171.20m for FY27. Supported by an assigned P/E multiple range of 14x–15x, we reiterate our Fair Value range of RM2.56 to RM2.74.

Research Team
6Aug26