PETALING JAYA: Online services provider MyEG Services Bhd has seen a demand for its core businesses during the current movement control order (MCO), given that it benefits from the absence of over-the-counter government services.
UOB Kay Hian Malaysia Research said other positive factors include the likely renewal of an e-government master concession which expires on May 20 and new profit streams, which will come from new online services introduced.
“Nevertheless, we reduce earnings after incorporating a higher effective tax rate for financial year 2021 (FY21)-FY22, ” it said in a report to clients yesterday.
The research house also said MyEG was expected to receive an official concession renewal after the MCO.
“The group does not expect any major changes in concession terms (such as pricing), except that the new concession tenure could be shortened to three years instead of five, which MyEG is seeking.”
UOB Kay Hian Research remained confident that MyEG will be able to extend its concession this round, riding on its “undisputed efficiency” and the “lack of other alternatives” so far.
“We understand that there have been no visible attempts by other companies to offer similar e-government services.”
It also pointed out that MyEG has introduced additional online services to bring conventional services to the digital platform.
It has, nevertheless, cut MyEG’s FY20-FY22 earnings forecasts by 4%, 12% and 16% respectively. This is taking into account a higher effective tax rate of 24% (from 2%) in 2021 and 2022.
That said, the research house thinks that potential earnings upside from a visa project and its foreign worker matching service following the resolution with its Bangladesh counterpart “should be more than enough” to offset the increase in taxes.
At the close of yesterday’s trade, MyEG saw its shares ending one sen higher to RM1.17.
Meanwhile in a filing with Bursa yesterday, MyEG said that its unit MyEG Philippines Inc has launched a contact tracing and digital health profiling smartphone app known as MyEGuard, which enables authorities to carry out contact tracing to contain the Covid-19 pandemic.
MyEG Philippines started implementing the MyEGuard for cities such as Paranaque City, NCR, Kidapawan City, North Cotabato and Ilagan City, Isabela (Central Luzon) in the Philippines.
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