MyEG’s share price has bottomed out, says CIMB Research

CIMB Research pointed out the termination of the rehiring programme is not a surprise.

KUALA LUMPUR: MyEG Services’ share price has bottomed after overcoming its immediate-term resistance trend line at 77.5 sen last Thursday, says CIMB Equities Research.

It said on Monday this immediate-term bottom was supported by the high trading volume of around 600 million shares last Thursday. 

“In addition, the daily RSI remains oversold at only 19.9 points, an indication the stock is long overdue for a technical rebound. The share price fell around 70% after the recent general election (GE),” it said.

CIMB Research said MyEG remains an Add. Its target price of RM1.22 remains the technology sector’s 2019 P/E target of 15 times. The last traded price is 86 sen.

“A re-rating catalyst is the company winning a contract for monitoring sales and service taxes while a downside risk is liberalisation of the industry, which may open MyEG’s niche segment to other players,” it said.

News reports stated MyEG will see its contract with the Immigration Department to carry out the government’s rehiring (registration of illegal foreign workers (IFW)) programme terminated by end-June. 

The company, together with two other vendor companies Iman Resources Sdn Bhd and Bukti Megah Sdn Bhd, will see their contracts eventually ending, an online news portal quoted Immigration Department Director-General Mustafar Ali as saying. 

The rehiring programme started in Feb 2016. Rehiring ends but all other services “business as usual”, says MD

The research house pointed out that MyEG had stated it already stopped new registrations for the rehiring programme at end-December 2017 and was given until end-June to process all incomplete cases. 

“All other services under the Immigration Department are operating as normal,” said MyEG’s managing director Wong Thean Soon.

CIMB Research pointed out the termination of the rehiring programme is not a surprise. The programme was supposed to be terminated at end-2017 but it was extended to end-June due to backlog cases. 

MyEG’s existing services, such as car road tax/insurance renewal and foreign worker working permit/insurance renewal, are not affected and remain “business as usual” for the company.

“We maintain our EPS forecasts for MyEG. We have assumed in our earnings projections for FY18-20F that the car road tax/insurance and foreign worker permit/insurance renewal services will continue but that the GST Monitoring (GSTM) project will be cancelled. 

“Earnings growth over the next one to two years is expected to come from MyEG’s new matching services, which started at end-2017. We estimate that MyEG matches 5,000 IFWs with potential new employees monthly and the company gets RM1,000 per completed IFW match,” it said.