MYEG (0138) - MY E.G. Services - Immigration counters to reopen until end-Feb
Target RM3.90 (Stock Rating: ADD)
The government is reopening the immigration counters until end-Feb due to public complaints about MyEG’s FWPR services. We believe that this is a short-term setback for MyEG, given the bigger-picture needs of the authorities to track foreign workers in the country. We maintain our FY15-17 EPS forecasts and target price, still based on 21x CY16 P/E (in line with its peers). The successful launch of the custom service tax monitoring (CSTM) project in Mar and public acceptance of the FWPR services are potential re-rating catalysts for the stock. We retain our Add call on MyEG.
What Happened
On Friday, The Immigration Department (TID) reopened its counters for the issuance of foreign worker permits, following public complaints about MyEG’s online foreign workers permit renewal (FWPR) services. However, TID counters will only be opened until end-Feb to allow employers to familiarise themselves with MyEG’s FWPR platform, which will operate concurrently with TID’s counters. Furthermore, it is mandatory for employers or company directors to be physically present at TID counters during the renewal process of their foreign workers permit.
What We Think
The reopening of TID’s counters for the renewal of foreign worker permits is not a surprise to us, after the recent public opposition to MyEG’s FWPR. However, we believe that this is only temporary. In addition, the foreign workers’ employers must be present at TID counters for biometric identification in order to prevent the usage of runners and agents. This would be inconvenient and time consuming for the employers. In the bigger picture, MyEG has been appointed by the authorities to track and maintain databases on both legal and illegal foreign workers (estimated 2.5m legal and 5m illegal), as well as weed out employers who use illegal foreign workers. In addition, the government needs to plug any leakages in TID and boost the country’s revenue.
What You Should Do
Remain invested in the stock. The reopening of TID counters is a short-term setback for MyEG. Unless there are alternatives, the government will use MyEG’s FWPR to track and maintain the foreign workers database. We like the stock for its expected strong earnings growth outlook, beneficiary of the goods and services tax (GST) and its debt-free balance sheet.
Source: CIMB Daybreak - 26 January 2015
Target RM3.90 (Stock Rating: ADD)
The government is reopening the immigration counters until end-Feb due to public complaints about MyEG’s FWPR services. We believe that this is a short-term setback for MyEG, given the bigger-picture needs of the authorities to track foreign workers in the country. We maintain our FY15-17 EPS forecasts and target price, still based on 21x CY16 P/E (in line with its peers). The successful launch of the custom service tax monitoring (CSTM) project in Mar and public acceptance of the FWPR services are potential re-rating catalysts for the stock. We retain our Add call on MyEG.
What Happened
On Friday, The Immigration Department (TID) reopened its counters for the issuance of foreign worker permits, following public complaints about MyEG’s online foreign workers permit renewal (FWPR) services. However, TID counters will only be opened until end-Feb to allow employers to familiarise themselves with MyEG’s FWPR platform, which will operate concurrently with TID’s counters. Furthermore, it is mandatory for employers or company directors to be physically present at TID counters during the renewal process of their foreign workers permit.
What We Think
The reopening of TID’s counters for the renewal of foreign worker permits is not a surprise to us, after the recent public opposition to MyEG’s FWPR. However, we believe that this is only temporary. In addition, the foreign workers’ employers must be present at TID counters for biometric identification in order to prevent the usage of runners and agents. This would be inconvenient and time consuming for the employers. In the bigger picture, MyEG has been appointed by the authorities to track and maintain databases on both legal and illegal foreign workers (estimated 2.5m legal and 5m illegal), as well as weed out employers who use illegal foreign workers. In addition, the government needs to plug any leakages in TID and boost the country’s revenue.
What You Should Do
Remain invested in the stock. The reopening of TID counters is a short-term setback for MyEG. Unless there are alternatives, the government will use MyEG’s FWPR to track and maintain the foreign workers database. We like the stock for its expected strong earnings growth outlook, beneficiary of the goods and services tax (GST) and its debt-free balance sheet.
Source: CIMB Daybreak - 26 January 2015
