Highlight MyEG roll-out next year

Highlight MyEG roll-out next year
Business & Markets 2013
Written by Cynthia Blemin of theedgemalaysia.com
Tuesday, 16 July 2013 08:49

KUALA LUMPUR: MyEG Services Bhd is looking at commissioning a multi-million ringgit deal to roll out the customs service tax monitoring (CSTM) system as early as 2014. The company is also in the process of commissioning its services for the registration of new cars and a bidding system for new car number plates.

Sources said the government has agreed in principle for the company to undertake both services but the letter of award is not out yet.

"The roll-out can only happen next year and not this year as expected," said a source.

The CSTM is targeted to link close to 100,000 point of sales terminals from about 20,000 restaurants and entertainment outlets throughout the country. The company is presently working with a local bank to launch a mobile payment system called iPayEasy that is compatible with the CSTM system.

MyEG has a 40% stake in the consortium of companies that is undertaking the CSTM project. The IT sevices provider has seen an euphoric run since the conclusion of the general election on May 5. Prior to the polls, the stock had been trading sideways due to uncertainties over political concerns as it deals with e-services which it provides mainly to government departments.

Since this year, MyEG shares have risen by 146.84% to close at RM1.95 last Friday. Yesterday, the share price continued to rise by 13.3% to close higher at RM2.21.

The new services are expected to spur growth to its top line due to the potentially lucrative market. The company's services are mainly linked to the Road Transport Department currently. They include electronic delivery of driver and vehicle registrations, licensing and summons services and utility bill payments.

The total capital expenditure for CSTM is RM100 million, the source said, and the consortium has so far invested RM50 million, with the remaining RM50 million to be pumped in before year-end.

CIMB analyst Nigel Foo said in a recent note that MyEG's share price has done very well this year. “It is already close to its original  target  price of RM1.57, which is  based on 18.7 times 2014 calendar year price-earnings ratio (PER) or a 20% premium to the target market PER of 15.6 times," he said.

Kenanga Research said while the group's long-term prospects remain intact, its current valuation appears to be stretched, capping potential upside. “As a result, we would recommend investors to take profit for now and re-accumulate on price weakness," it said.

Kenanga noted that MyEG had chalked up hefty gains and clearly outperformed the benchmark FBM Small Cap Index, which inched up by only 2% to 15,085.9, over the same period.

MyEG has some boutique investment funds as its core shareholders. Among them are Utilico Emerging Markets Ltd and Creador Malaysia, a fund headed by Brahmal Vasudevan. The chairman of the company is Datuk Dr Norraesah Mohamed, a long-time member of the Umno supreme council. But the company is driven by Wong Thean Soon, the managing director with direct and indirect interests of 40.26%.


This article first appeared in The Edge Financial Daily, on July 16, 2013.