MYEG (0138) - MY E.G. Services - Competition for MYEG’s FWPR?
Target RM3.90 (Stock Rating: ADD)
The Edge Weekly indicated that a private company is interested in competing for the custom service tax monitoring project (CSTM). This comes as a negative surprise to us. However, we think that it is too late for any new players to enter this market, as MyEG’s CSTM platform is expected to be rolled out nationwide at end-Feb. We maintain our FY15-17 EPS forecasts and target price, based on unchanged 21x CY16 P/E (in line with its peers). The successful launch of the CSTM project in Mar and higher public acceptance of the FWPR services are potential re-rating catalysts for the stock. We maintain our Add recommendation for MyEG.
What Happened
The Edge Weekly reported that private company Sinarvezion Sdn Bhd is eyeing MyEG’s custom service tax monitoring project (CSTM). Sinavezion is believed to be backed by China’s Aisino Co Ltd, which offers a national e-receipt service, which is being sold as a transparent and efficient system to track the goods and services tax (GST). Sinarvezion has two directors, Choong Wan An and James Khong Poh Wah. Mr Chong was formerly Director of Sales at Iris Corp and Mr Khong was a director at Kencana Petroleum. According to The Edge’s sources, Sinarvezion has obtained letters of support from high-level officials in the Ministry Of Finance (MOF).
What We Think
The Edge Weekly article was a negative surprise to us. However, we believe that it is too late for Sinarvezion, as MyEG has already secured the letter of award (LOA) for the CSTM project from the authorities. The CSTM platform is expected to be rolled out nationwide by end-Feb. It has been a long journey for MyEG. The company proposed the CSTM project to the government in 2009 and only received the LOA five years later. In addition, Sinarvezion’s partner is a Chinese company and we believe that the authorities are not keen for foreign companies to deal with such sensitive data.
What You Should Do
Recent price weakness offers the opportunity to accumulate the stock. Investors are currently focusing on the foreign workers working permit renewal services (FWPR). The government will decide by end-Feb whether to keep the counters at the Immigration Department open or only allow MyEG’s FWPR to offer services. There is a pressing need for the government to track foreign workers and as such, we believe that the authorities will support MyEG’s FWPR platform at the end of the day.
Source: CIMB Daybreak - 16 February 2015
Target RM3.90 (Stock Rating: ADD)
The Edge Weekly indicated that a private company is interested in competing for the custom service tax monitoring project (CSTM). This comes as a negative surprise to us. However, we think that it is too late for any new players to enter this market, as MyEG’s CSTM platform is expected to be rolled out nationwide at end-Feb. We maintain our FY15-17 EPS forecasts and target price, based on unchanged 21x CY16 P/E (in line with its peers). The successful launch of the CSTM project in Mar and higher public acceptance of the FWPR services are potential re-rating catalysts for the stock. We maintain our Add recommendation for MyEG.
What Happened
The Edge Weekly reported that private company Sinarvezion Sdn Bhd is eyeing MyEG’s custom service tax monitoring project (CSTM). Sinavezion is believed to be backed by China’s Aisino Co Ltd, which offers a national e-receipt service, which is being sold as a transparent and efficient system to track the goods and services tax (GST). Sinarvezion has two directors, Choong Wan An and James Khong Poh Wah. Mr Chong was formerly Director of Sales at Iris Corp and Mr Khong was a director at Kencana Petroleum. According to The Edge’s sources, Sinarvezion has obtained letters of support from high-level officials in the Ministry Of Finance (MOF).
What We Think
The Edge Weekly article was a negative surprise to us. However, we believe that it is too late for Sinarvezion, as MyEG has already secured the letter of award (LOA) for the CSTM project from the authorities. The CSTM platform is expected to be rolled out nationwide by end-Feb. It has been a long journey for MyEG. The company proposed the CSTM project to the government in 2009 and only received the LOA five years later. In addition, Sinarvezion’s partner is a Chinese company and we believe that the authorities are not keen for foreign companies to deal with such sensitive data.
What You Should Do
Recent price weakness offers the opportunity to accumulate the stock. Investors are currently focusing on the foreign workers working permit renewal services (FWPR). The government will decide by end-Feb whether to keep the counters at the Immigration Department open or only allow MyEG’s FWPR to offer services. There is a pressing need for the government to track foreign workers and as such, we believe that the authorities will support MyEG’s FWPR platform at the end of the day.
Source: CIMB Daybreak - 16 February 2015
