KUALA LUMPUR: Investors dumped My EG Services Bhd
's (MyEG) shares at the start of Tuesday trading as the company was expected to be negatively impacted by the reversion of immigration services and processes to the Immigration Department in 2025.
The stock gapped down 30 sen or 31.41% to the bottom limit of 65.5 sen a share at the opening bell, as investors reacted with a flurry of selling activity.
As at 10.18am, the share had pared losses to trade 18.5 sen or 19.4% lower at 77 sen a share on the back of 599.83 million units exchanging hands.
A New Straits Times article yesterday cited Immigration director-general Datuk Khairul Dzaimee Daud as saying the department was moving to directly handle all immigration transactions, including those currently being handled by outside parties, via the national integrated immigration system (NIISe).
Besides passport renewals and visa applications, the transactions would also include applications and renewals of foreign workers' permits and maid permits.
This is expected to negatively impact the revenue of independent contractors currently involved in providing services, including MyEG.
However, UOB Research reiterated its "buy" call on the electronic government solutions provider and considers the drop in share price a "great buying opportunity".
"We are unsure how much weight this present director general carries, but should MYEG lose it’s concession with the immigration, it would theoretically still be able to provide ancillary businesses within the eco system such as foreign worker matching, accommodation services, door-to-door and insurance services that’s the bulk of its immigration-related earnings," it said in a note.
The research firm also said there are plenty of catalysts in 2023 and beyond for the company.
These include a forecast of 16% earnings growth, the launch of the Zetrix blockchain relating to China customs, IPO and subsequent distribution in specie of start-up investments in China and Malaysia.
"At today’s limit down price, the company’s trading at below two standard deviations to mean valuation, at about 2023 10x price-earnings.
"We maintain our RM1.30 target price as we take the position that MYEG’s concession would not compromised in 2025," said UOB.
Meanwhile, Bursa Malaysia has suspended the short selling of MyEG shares for the rest of the day under proprietary day trading (PDT) and intraday short selling (IDSS).
This was owing to the stock's share price dropping more than 15 sen or 15% from the reference price.
"The short selling under PDT and IDSS will only be activated the following trading day, on Wednesday, at 08:30 am,” said the market operator in a stock filing.
