My EG’s GST monitoring launch set for end-2017

My EG Services

KUALA LUMPUR: My EG Services’ GST monitoring (GSM) project’s Phase 1 nationwide launch is taking longer than expected and the target launch is now set for end-2017 versus June 2017 previously, according to CIMB Equities Research. 

It said on Wednesday MyEG faced some teething problems in the past few months during the installation of dongles at the older cash registers (more than five years old) in F&B outlets in Klang Valley. 

“However, it said all issues have been resolved. MyEG has so far installed 5,000 dongles in Klang Valley in F&B outlets and is targeting to install nationwide by year-end (our earlier target was June 2017),” said the research house.

However, the good news is that MyEG recently launched a service to match employers with illegal foreign workers (IFW) who are not registered under the rehiring programme. 

This service allows employers to source new foreign workers from the existing IFW base. MyEG gets RM1,000 for matching an employer with an IFW. 

“We also expect the company to benefit from selling the compulsory foreign workers’ insurance to the employers. MyEG said it will ensure the welfare of foreign workers, by making sure their salaries are paid and there is no worker abuse by the employers.
“In the next one year, MyEG is targeting to place out 100,000 foreign workers. In our earnings forecast, we assume a more conservative average of 5,000 foreign workers monthly or 60,000 foreign workers annually. 

“This would help MyEG generate an average annual revenue of RM60mil. We assume 50% net profit margin for the matching services (in line with the 50% net profit margin from existing foreign worker services) and an annual net profit of RM30mil,” it said.   

 “Cut FY18-19F EPS by 8.1-19.1% to reflect the GSM Phase 1 launch delay. However, raise TP from RM2.68 to RM3.04 as we roll over our valuation to end-2018,” it said.

To recap, Malaysian Employers Federation estimates there are around two million IFWs in the country. 

By the end of the rehiring programme in end-2017, CIMB Research expects the government to register one million IFWs. However, it believes there would still be another one million unregistered IFWs.  
“Overall, we estimate that the potential income from the new matching services will not be able to offset the loss in income from the delay in the implementation of the GSM project. 

“As such, we lower our FY18-19F EPS by 8.4-19.1% mainly to reflect the delay in the completion of the nationwide launch of GSM Phase 1. However, we raise our FY20F EPS by 6.3% to reflect higher earnings from foreign workers matching services. 

“With year-end in around three months, we roll over our valuation to end-2018, with our TP now based on 2019F 25.2 times P/E, a 20% premium to the technology sector.  

“As such, our TP rises from RM2.68 to RM3.04. Retain Add. Catalysts are successful launch of MyEG’s new service and also successful nationwide launch of the GSM project. Risks are further delays in the CSM project,” said CIMB Research. 

Subscribe now to our Premium Plan for an ad-free and unlimited reading experience!

GST , illegal foreign workers


Next In Business News

BNM: Micro, small businesses to continue enjoying zero-cost transactions via DuitNow QR payments
Hong Leong Bank to continue to waive transaction fees for DuitNow QR payments
Public Mutual declares over RM47mil for two funds
Budget 2024: A tough balancing act for Anwar
Marine & General cautiously optimistic about FY24 performance
WtE space heats up
CPO price set to recover
Private hospitals, insurers stirred as claims rise
Fit for expansion
Streamlining a business practicality

Others Also Read