MYEG (0138) : MY E.G. Services - Expanding scope of FWPR
Target RM3.90 (Stock Rating: ADD)
In a press release on Friday, the Immigration Department of Malaysia supported and expanded the scope of MyEG’s implementation of the foreign workers permit renewal (FWPR) system to include bearing the responsibility of ensuring that valid insurance for the foreign workers is in place and deportation costs for the illegal foreign workers detained. We maintain our FY15-17 EPS forecasts and target price, still based on 21x CY16 P/E (in line with peers). The successful launch of the custom service tax monitoring (CSTM) project and new developments in its road safety diagnostic kit project are potential re-rating catalysts for the stock. We retain our Add call on MyEG.
What Happened
During a press announcement on Friday, MyEG announced that the country’s Immigration Department has expanded the scope of implementation for the foreign workers permit renewal (FWPR) system starting on 5 Jan 2015. Apart from renewing the foreign workers’ permits, FWPR would help to: i) identify legal foreign workers and employers who hire illegal workers, and ii) provide a more convenient and efficient way to renew workers’ permits. MyEG will be responsible for ensuring that there is valid insurance is in place prior to processing the FWPR transactions. MyEG will also bear the deportation costs for the illegal foreign workers detained. Insurance guarantees, foreign workers compensation schemes and foreign workers hospitalisation schemes may be purchased through any insurance agent, including MyEG.
What We Think
There is a serious need to track foreign workers in this country, as security has become a major concern, given the huge number of foreign workers (2.5m legal and estimated 5m illegal workers). As such, we are positive about authorities working closely with MyEG to track both foreign workers and their employers. Although there is some opposition, we believe that the authorities will not stop the compulsory usage of MyEG’s FWPR due to its importance in maintaining and updating the foreign workers database. We maintain our FY15-17 EPS forecasts as we have already imputed the deportation costs for the illegals.
What You Should Do
Remain invested in the stock. MyEG’s earnings growth is strong, at 71% 3-year EPS CAGR. Its operations are not affected by the weak Ringgit and the higher interest rates, as well as the goods and services tax (GST), are positive factors for the company, given its CSTM project. Even after the sharp share price rally last week, MyEG’s valuation is not expensive at 14.6x CY16 P/E.
Source: CIMB Daybreak - 12 January 2015
Target RM3.90 (Stock Rating: ADD)
In a press release on Friday, the Immigration Department of Malaysia supported and expanded the scope of MyEG’s implementation of the foreign workers permit renewal (FWPR) system to include bearing the responsibility of ensuring that valid insurance for the foreign workers is in place and deportation costs for the illegal foreign workers detained. We maintain our FY15-17 EPS forecasts and target price, still based on 21x CY16 P/E (in line with peers). The successful launch of the custom service tax monitoring (CSTM) project and new developments in its road safety diagnostic kit project are potential re-rating catalysts for the stock. We retain our Add call on MyEG.
What Happened
During a press announcement on Friday, MyEG announced that the country’s Immigration Department has expanded the scope of implementation for the foreign workers permit renewal (FWPR) system starting on 5 Jan 2015. Apart from renewing the foreign workers’ permits, FWPR would help to: i) identify legal foreign workers and employers who hire illegal workers, and ii) provide a more convenient and efficient way to renew workers’ permits. MyEG will be responsible for ensuring that there is valid insurance is in place prior to processing the FWPR transactions. MyEG will also bear the deportation costs for the illegal foreign workers detained. Insurance guarantees, foreign workers compensation schemes and foreign workers hospitalisation schemes may be purchased through any insurance agent, including MyEG.
What We Think
There is a serious need to track foreign workers in this country, as security has become a major concern, given the huge number of foreign workers (2.5m legal and estimated 5m illegal workers). As such, we are positive about authorities working closely with MyEG to track both foreign workers and their employers. Although there is some opposition, we believe that the authorities will not stop the compulsory usage of MyEG’s FWPR due to its importance in maintaining and updating the foreign workers database. We maintain our FY15-17 EPS forecasts as we have already imputed the deportation costs for the illegals.
What You Should Do
Remain invested in the stock. MyEG’s earnings growth is strong, at 71% 3-year EPS CAGR. Its operations are not affected by the weak Ringgit and the higher interest rates, as well as the goods and services tax (GST), are positive factors for the company, given its CSTM project. Even after the sharp share price rally last week, MyEG’s valuation is not expensive at 14.6x CY16 P/E.
Source: CIMB Daybreak - 12 January 2015
