WHAT’S NEW

Based on our channel checks, we understand that the pilot stage of the e-bidding services for vehicle plates could begin as early as next month with the actual roll-out of the services on Jan 19.

COMMENT

• Main beneficiary of e-bidding services for vehicle plates. Recall that the newly-installed minister of transportation repealed the practice of allowing certain non-government organisations to sell special vehicle number plates, and announced the roll-out an electronic bidding system from Jan 19. We believe that MYEG stands to be the main beneficiary of e-bidding (which was one of the services under the concession signed in 2000), which can be seamlessly integrated into the existing road transport department e-portal which it manages.
• Dispel undue fears of losing its e-government concessions. The winning of the e-bidding services for vehicle plates would dispel misgivings on its abilities to retain its key government concessions and thus imply that MYEG shows no signs of losing traction with the new government. While revenue from the said service is not major, it allows MYEG to leverage on such modest fee-based platforms to upsell commercial services within the same domain.

EARNINGS REVISION

No changes to net profit forecast.

RECOMMENDATION

Maintain BUY with an unchanged target price of RM1.06, based on 12.7x FY19F PE, implying -1.3SD which is below its historical mean PE amid current market uncertainty. Our assessed trough valuation is RM0.84/share, based on 10x FY19F PE.

Source: UOB Kay Hian Research - 6 Jun 2018