Clarifying DneX’s eWork permit, MyEG renewal permit

UOB Kay Hian Malaysia Research believes that MyEG Services stands to be the sole beneficiary of e-bidding for the vehicle plates.

KUALA LUMPUR: Dagang Nexchange’s “eWork Permit” project has nothing to do with MyEG’s privatised project pertaining to the renewal of foreign workers working permit, CIMB Equities Research points out.

It said on Friday it had organised a conference call with MyEG and its institutional investors to clarify concerns about DneX’s “eWork Permit” project.

“DneX is building a new back-end system for Bukit Megah Sdn Bhd for the latter's rehiring programme. MyEG no longer allows Bukit Megah to use its back-end system,” it said.

DneX would be paid RM30 per transaction of “eWork Permit”, which is the name of the new back-end system to be set up for Bukit Megah’s rehiring operations.

CIMB Research said in mid-Feb 2016, the government appointed three parties for the rehiring programme. Bukit Megah was picked for the registration of Myanmar illegal foreign workers (IFWs), IMAN for Indonesian IFWs and MyEG for other races. 

“MyEG shared with us that Bukit Megah and IMAN used its back-end system to register the IFWs. MyEG dominated by handling 95% of the total IFWs registration as only 5% IFWs registered were from Myanmar and Indonesia,” it said.

The research house said from Feb 15, 2017 onwards, all three parties could now register IFWs of all races. 

As such, MyEG is not allowing Bukit Megah and IMAN to use its back-end system anymore, which is why Bukit Megah signed an agreement with DneX to set up its own back-end system for the rehiring programme. 

DNEX’s “eWork Permit” has no connection with MyEG’s renewal and printing of foreign workers working permit (FWWR), a privatisation project awarded by the government to MyEG.

“We are relieved that MyEG’s FWWR privatisation service was not affected by DneX. Investors were earlier confused that DneX’s new “eWork Permit” system could have penetrated MyEG’s FWWR privatisation services. 

“So far, MyEG is the only provider for the FWWR services, after signing an agreement with the government a few years ago.

“Although MyEG could now face some competition from Bukit Megah and IMAN for the registration of IFWs, we believe the company should still be doing most of the registration of the IFWs. 

“MyEG is more established and already has a running back-end system with staff while Bukit Megah and IMAN has to set up new back-end systems. New systems could have teething problems in the first few months. As such, we are maintaining our forecast that MyEG will hit total registration of one million IFWs by end-June.

“We keep our EPS forecasts and target price, based on an unchanged 25.2 times 2018 P/E, a 20% premium over our 21 times P/E target for the technology sector; the premium is justified by its 53.6% 3-year EPS CAGR (FY17-19F). 

“A successful launch of the GST monitoring project is a potential re-rating catalyst. Risks are weak registration of IFWs. Recent price weakness offers investors the opportunity to accumulate. MyEG remains an Add,” it  said.