WHAT’S NEW

Recent updates have boosted investors’ confidence in MYEG. These include securing more e-government jobs and making good inroads into the Philippines.

COMMENT

• Promises of securing more e-government services. We understand that apart from the Road Transport Department instructing MYEG to start e-bidding trial runs for special car plate e-bidding, the Immigration Department (under the new administration) has confirmed the continuity of a new programme initiative.
• Inroads into the Philippines. We understand that MYEG’s Philippine JV (i-Pay MYEG) has added another e-government service - the bundling of personal loan application with the police certification of good conduct. About 20,000 certificates of good conduct are expected to be issued daily, and assuming a 10% conversion for personal loan applications (which generates an equivalent of RM100 processing fee), the i-Pay MYEG’s fees would be RM200,000/day.

EARNINGS REVISION

No changes to our net profit forecasts. We understand that growth will normalise upwards in the current reporting period and we have not factored in contributions from i-Pay MYEG.

RECOMMENDATION

Maintain BUY with potential upside to our 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 - 11 Jun 2018