MYEG Services Bhd does not find its offerings in the e-government service realm being affected by the current implementation of total lockdown but instead seen increased online transaction volume given government payment counters are closed during the full movement control order (FMCO) period.
Additionally, the group revealed that new services such as online motorcycle insurance and road tax (MITR) renewal which started in 4Q 2020 are gaining traction, according to CGS-CIMB Research.
“MyEG expects to capture 40-50% market share for MITR within the next three years from 10% currently,” projected analyst Mohd Shanaz Noor Azam in a company update.
“Overall, we estimate the anchor services-related to road transport and immigration will remain fairly stable, making up 65% of the group’s FY 2021F revenue (vs 70% in FY 2020).”
While investors were excited about near-term growth from MyEG’s venture into healthcare-related services, concerns have been raised that healthcare contribution could taper off beyond FY 2021F following the growing vaccination rate.
Nevertheless, the management believes demand for mass screening, especially in high traffic locations, such as airports, will increase as countries gradually ease restrictions for international travellers amid concerns over the spread of new COVID-19 variants.
“For example, MyEG recently entered into an MOU with Singapore’s Breathonic Pte Ltd to work on gaining regulatory approval for the introduction of a rapid breath test for COVID-19 screening in Malaysia,” shared CGS-CIMB Research.
“MyEG also plans to participate in a potential vaccine passport project as and when the Government decides to roll out the system.”
Moreover, the group plans to leverage on its partnerships with Anhui Zhifei Longcom Biopharmaceutical (AZLB) to distribute AZLB’s healthcare-related products outside of China, such as in the Philippines.
“Overall, we expect healthcare-related services to contribute 25%-30% to FY 2021F revenue (vs 10% in FY2020),” opined the research house.
All-in-all, CGS-CIMB Research retained its “add” rating on MyEG with a target price of RM2.50 based on 26 times CY2022F price-to-earnings ratio (PE).
“Finally, the group has submitted applications for new investment tax allowances from the Government that will allow it to benefit from lower effective tax rates following its investment in new technology for e-government services,” revealed the research house.
“We see potential extension of tax incentives for the group as a share price catalyst.”
At the close of today’s morning session, MyEG was up 1 sen or 0.54% to RM1.87 with 2.42 million shares traded, thus valuing the company at RM7.05 bil. – June 18, 2021
