MyEG up on news MyCC accepted changes to services

CGS-CIMB, in a research report, said MyCC

PETALING JAYA: MyEG Services Bhd’s shares closed 17.8% higher at RM1.19 yesterday, following news that the Malaysia Competition Commission (MyCC) has accepted the changes made to the group’s online foreign worker renewal services.

It was traded at a top volume of 263.86 million shares.

However, MyEG’s appeal remains. The group had filed an appeal to the Court of Appeal against the decisions made earlier by MyCC and the Competition Appeal Tribunal, as well as the penalty imposed by MyCC.

CGS-CIMB, in a research report, said MyCC’s acceptance of the changes was a positive development for MyEG, as it effectively ended the four-year challenge against MyEG and ceased the daily penalty of RM7,500 with immediate effect.

“Assuming MyEG wins the appeal case against MyCC, the group can write-back the RM6.4mil which it has already paid, boosting the financial year 2019 (FY19) earnings per share (EPS) by 2.1%.

“If MyEG loses the appeal case, it could hurt its FY19 EPS by 1%,” said CGS-CIMB.

To date, MyEG has paid a RM6.4mil penalty to MyCC, with RM3.2mil yet to be paid.

In 2019, MyEG will focus on its new service - the online registration of new foreign workers (NFW), which is expected to be its new revenue growth driver for domestic operations over the next one to two years.

In view of MyEG’s experience in handling foreign workers’ work permit renewals and its close relationship with the government, CGS-CIMB believes the company would be one of the major independent agents for NFW registrations this year.

MyEG is expected to generate an average revenue of RM2,000 per NFW. The group is currently waiting for the government to set the NFW quota for 2019. Once the quota has been set, it could start registering the NFWs.

“In our earnings forecast, we have assumed that MyEG would register only 5,000 NFWs per annum in FY19 to FY20.

“Based on our sensitivity analysis, every additional 10,000 NFW registrations would boost our FY19 to FY20 EPS by 3.2% to 3.3%,” said CGS-CIMB.

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