KUALA LUMPUR: UOB Kay Hian Malaysia Research has downgraded MY E.G. Services to Hold as the share price rallied 47% in the past month and increase its target price to RM1.27 as it rolls forward its valuation to 2019. Entry price: RM1.14.
It said on Friday while MYEG remains relevant as an indispensable enabler of e-government services that cuts down red tape and corruption, it requires government resolution to commence various earnings-accretive catalysts.
The research house said while the pilot stage of e-bidding services for vehicle plates which was supposed to start on Aug 1 was delayed, the actual roll-out of the service was still targeted for January 2019.
Understandably, the pilot project will require MY EG’s back-end operating system, hence increasing the possibility of MY EG becoming a beneficiary of e-bidding services when the Ministry of Transportation (MOT) announces the project winner later this year.
Recall that the newly-formed MOT repealed the practice of allowing certain non-government organisations to sell special vehicle number, and announced the roll-out an electronic bidding system from January 2019.
“We remain convicted that MYEG stands to be a key beneficiary of e-bidding,” it said.
As for the remittance services for foreign workers, it said that after the long drawn-out talks with regulators and foreign currency licensees, it understands that MYEG is ready to roll out remittance services by 3Q18.
“The group will be able to rake in an undisclosed amount of transaction fees and forex spreads when the venture takes off. This business has huge potential given that the annual remittances outflows are worth about RM36bil,” it said.
UOB Kay Kian Research said the worker matching and accommodation momentum was dampened by slowdown of foreign worker intake.
It pointed out the new government has embarked on various clean-up processes to ensure efficiency and effectiveness that inadvertently slowed down the entry of foreign workers into Malaysia.
The Ministry of Human Resources has proposed to revert the current system of hiring foreign workers to the government-to-government approach without any middlemen, such as private company Bestinet which has received bad press of late (allegations that it has profited too much on its monopoly).
This new process in theory enhances the need for an efficient online system like MYEG’s, but meanwhile, has disrupted MYEG’s worker matching and accommodation businesses.
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