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Author: kltrader   |   Latest post: Fri, 18 Jan 2019, 09:53 AM

 

MYEG – Key Takeaways From Conference Call With MD

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Macquarie Equities Research (MQ Research) had a conference call with My E.G. Services (MYEG)’s Managing Director (MD), MR Wong Thean Soon, as stated in its report dated late last Friday (19 Oct). MQ Research believes MYEG has no direct link to Mastoro Kenny IT Consultant and Services (MKICS), and is not part of the investigation between MKICS and Zahid Hamidi.

MQ Research maintains their valuation on MYEG at RM1.35.

Conclusion

  • The conference call MQ Research had with MYEG’s MD, Mr Wong Thean Soon, led MQ Research to believe that MYEG has no direct link to MKICS and is not part of the investigation between MKICS and Zahid Hamidi. To recap, MKICS issued 24 cheques worth RM13.3mil to Zahid in exchange for a contract award from MYEG which MQ Research believes did not materialise.

Impact

  • A name-dropping case? MYEG released a statement in the second half of the day indicating that the Malaysian Anti-Corruption Commission (MACC) confirmed MYEG is not a party to the investigation in relation to the charges against Zahid Hamidi. Management indicated that it has no knowledge of MKICS nor had any dealings with it. MQ Research reiterates their thesis as per their previous report, where MKICS made an upfront payment to Zahid in exchange for a contract by MYEG, which did not materialise.
  • All e-government services are done in-house. MQ Research understands that MYEG does not appoint any third party to provide these services, i.e. foreign worker permit renewal and road tax renewal. The company, however, sources their hardware from third parties, understandably, as they do not undertake any manufacturing activities themselves. MQ Research gathers that the procurement process involves requests for proposals from a small number of suppliers.
  • Business as usual. MQ Research noted that there have been no major changes in terms of the operating landscape between MYEG and respective government agencies under the new administration. As such, MQ Research believes MYEG will continue to provide e-government services, assuming it is not implicated in any other investigations.

Action and Recommendation

  • MQ Research maintains their valuation on MYEG at RM1.35 and should the share price rebound to Thursday’s close (RM1.50), investors would be selling into strength.

Source: Macquarie Research - 22 Oct 2018

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