The company's revenues could fall by the second half of 2025 following the completion and migration of the immigration system to National Integrated Immigration System, says Maybank IB Research.
PETALING JAYA: MyEG Services Bhd (MyEG) will face a revenue shortfall of 6% to 7% by financial year 2025 (FY25) and 8% to 10% by FY26 if it is no longer involved in the nation’s immigration system by 2025.
Its revenues could fall by the second half of 2025 following the completion and migration of the immigration system to National Integrated Immigration System (NIISe).
The immigration segment contributes about 35% to 40% of its overall annual revenue, although only 10% (RM70mil to RM80mil) is related to the government concession i.e. the foreign worker permit renewal, said Maybank IB Research.
It said the balance 25% to 30% (about RM200mil) is the commercial aspect of the business, namely for commissions from cross-selling of insurance products, and foreign worker recruitment for employers
CGS-CIMB Research said the immigration services transactions would account for 18% to 21% of MyEG’s FY23 to FY24 revenue and profit after tax.
Stripping out the immigration services contributions, its target price (TP) would fall to 82 sen a share, which offers a 17% upside from current levels.
MyEG’s share price took a beating since the government announced on Feb 6 that “all immigration related services, including those managed by external parties, could revert to the Immigration Department with the potential rollout of the NIISe project.’’
CGS-CIMB Research has 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 FY23.
It retained its “add’’ rating with a lower RM1 target price, based on a lower 20 times price earning (PE) ratio (versus 22 times previously), as it updates its target multiple to reflect its latest five-year mean PE (2018 to 2022).
It added that the delays in the recovery of its job-matching service, lack of new e-government digital service introduction and removal of immigration and transport related concession services are downside risks to its call.
