MYEG (0138) - MY E.G. Services - Another player for FWPR?
Target RM3.90 (Stock Rating: ADD)
News that the authorities are looking at an alternative player to MyEG’s foreign workers working permit renewal services (FWPR) came as a negative surprise to us. However, we are not too concerned as it will take at least 3-4 years for a new player to set up its operations and get the approvals; by then, MyEG would already have a huge first-mover advantage. We maintain our EPS forecasts and target price, based on 21x CY16 P/E (in line with its peers). The stock remains an Add. Potential re-rating catalysts include successful launch of its custom service tax monitoring (CSTM) project and higher takeup rates for its FWPR services.
What Happened
According to an article today in themalaysianinsider.com quoting Deputy Home Minister Datuk Seri Dr Wan Junaidi Tuanku Wan Jaafar, Putrajaya is looking into setting up an agency under the Modernisation and Management Planning Unit (Mampu) to manage the renewal of foreign workers’ permits and break the monopoly held by MyEG. The move has not been implemented yet. Dr Wan Junaidi commented that “there is nothing wrong with MyEG, it is just not to have a monopoly". Putrajaya had appointed MyEG to renew foreign workers permits in Jan 2015. Defending MyEG's services, Dr Wan Junaidi said that the government had consented to outsourcing the services to MyEG because it was better for employers to pay RM38 rather than paying RM300-500 to intermediaries or middle men.
What We Think
This news came as a negative surprise to us but we are not too concerned. Even if there was a new player for the FWPR services, it would take 3-4 years to get the necessary approvals from the authorities and by then, MyEG would already have a huge first mover advantage. In addition, in Jan-2015, the authorities appointed MyEG to set up and maintain a database on the legal and illegal foreign workers, and the company is able to do this using its online FWPR services. For now, employers can either use MyEG’s FWPR services or go to the Immigration counters. However, in the immediate term, we believe the authorities should soon finalise the decision on whether to fully use the FWPR services. We believe the decision is likely to be in MyEG’s favour.
What You Should Do
Remain invested in the stock. In the immediate term, the stock could experience a knee-jerk reaction. Investors should take this opportunity to accumulate the stock.
Source: CIMB Daybreak - 09 April 2015
Target RM3.90 (Stock Rating: ADD)
News that the authorities are looking at an alternative player to MyEG’s foreign workers working permit renewal services (FWPR) came as a negative surprise to us. However, we are not too concerned as it will take at least 3-4 years for a new player to set up its operations and get the approvals; by then, MyEG would already have a huge first-mover advantage. We maintain our EPS forecasts and target price, based on 21x CY16 P/E (in line with its peers). The stock remains an Add. Potential re-rating catalysts include successful launch of its custom service tax monitoring (CSTM) project and higher takeup rates for its FWPR services.
What Happened
According to an article today in themalaysianinsider.com quoting Deputy Home Minister Datuk Seri Dr Wan Junaidi Tuanku Wan Jaafar, Putrajaya is looking into setting up an agency under the Modernisation and Management Planning Unit (Mampu) to manage the renewal of foreign workers’ permits and break the monopoly held by MyEG. The move has not been implemented yet. Dr Wan Junaidi commented that “there is nothing wrong with MyEG, it is just not to have a monopoly". Putrajaya had appointed MyEG to renew foreign workers permits in Jan 2015. Defending MyEG's services, Dr Wan Junaidi said that the government had consented to outsourcing the services to MyEG because it was better for employers to pay RM38 rather than paying RM300-500 to intermediaries or middle men.
What We Think
This news came as a negative surprise to us but we are not too concerned. Even if there was a new player for the FWPR services, it would take 3-4 years to get the necessary approvals from the authorities and by then, MyEG would already have a huge first mover advantage. In addition, in Jan-2015, the authorities appointed MyEG to set up and maintain a database on the legal and illegal foreign workers, and the company is able to do this using its online FWPR services. For now, employers can either use MyEG’s FWPR services or go to the Immigration counters. However, in the immediate term, we believe the authorities should soon finalise the decision on whether to fully use the FWPR services. We believe the decision is likely to be in MyEG’s favour.
What You Should Do
Remain invested in the stock. In the immediate term, the stock could experience a knee-jerk reaction. Investors should take this opportunity to accumulate the stock.
Source: CIMB Daybreak - 09 April 2015
