E-GOVERNMENT solutions and service provider MyEG Services Bhd stands to receive another extension to its immigration-related services concession which is due in May 2023 given that the government’s National Integrated Immigration System (NIISe) project is unlikely to be ready anytime soon.
In a review of the counter’s price tumble of 25.5 sen or 26.7% yesterday (Feb 7). CGS-CIMB Research expects this to be the optimal outcome in the near-term given that it does not expect the government “to immediately replace the incumbent service providers and risk a public backlash if the new system fails to deliver”.
“MyEG said it has not held any meetings with either the Home Affairs Ministry or Immigration Department on the intention to converge immigration transactions under the NIISe,” commented analyst Mohd Shanaz Noor Azam after hosting a conference call with MyEG’s CEO Wong Thean Soon who holds a 31.2% stake in the company yesterday (Feb 7).
“The company added that it expects to maintain its foreign workers and maid permit renewals until at least 2025.”
The conference call was centred on the potential impact on MyEG’s operations following a Feb 6 New Straits Times report which said the company’s immigration-related services, including those managed by external parties, could revert to the Immigration Department with the potential roll-out of the NIISe project.
These services include passport renewals and visa applications as well as applications and renewals of foreign worker and maid permits.
Stripping out the immigration services contributions which contributes about RM70 mil in annual revenue to MyEG based on the last extension worth RM208 mil for three years signed in 2020, CGS-CIMB Research said its target price would fall to 82 sen which still offers a 17% upside from current levels (MyEG closed at 70 sen yesterday).
“We estimate the immigration services transactions will account for 18%-21% of MyEG’s FY2023-FY2024F revenue and net profit,” projected the research house. “(That said), we have also not factored in new earnings potential from its Zetrix blockchain despite the group expecting to see material earnings contributions from its Web3 development in FY2023F.”
All-in-all, CGS-CIMB Research reiterated its “add” rating on MyEG with a lower target price of RM1 (from RM1.10 previously).
At 9.15am, MyEG was up 2.5 sen or 3.57% to 72.5 sen with 58.9 million shares traded, thus valuing the company at RM5.42 bil.
