• Covid-19 rapid testing kit for Malaysians and Filipinos. MYEG has introduced Covid-19 testing kit in Malaysia and the Philippines which is currently awaiting for approval by local authorities. The Covid-19 testing kits are developed by a diagnostic company and approved by health authorities in China where they are presently widely used. The testing kits enable to detect the presence of the Covid-19 virus through blood samples and generate test results onsite within 30 minutes.
• Handful testing kits for public. We are positive over the announcement as we see the Covid-19 testing kits to provide additional earnings growth to MYEG. Besides that, we believe this would be a handful for the government to manage the request from the public for Covid-19 tests. On 4 Mar 2020, the Ministry of Health (MOH) has collaborated with private hospitals and healthcare providers for Covid-19 testing from the homes. Currently, there are over 10 private companies involving with collection of Covid-19 samples from home where the fee ranges from RM700-900 per sample. However, the sample testing process normally will take over 24 hours. Meanwhile, management guided that MYEG’s Covid-19 testing kits will be offered at affordable prices for the public, compared to existing tests.
• Complementary service offered for VLN. Management guided the Covid-19 testing kits will be a complementary service for Visa Luar Negara (VLN) together with artificial intelligence (AI)-powered Coronavirus risk profiling system. We see MYEG as a strong contender versus other companies bidding for VLN given its valueadded services which offer benefits to the government.
• No change to earnings for now. Despite our positive view on the announcement, we make no change to earnings for now as we wait further details from the management and approval from authorities for the testing kits.
• Maintain BUY at RM1.70 TP. Maintain BUY with a DCF-derived TP of RM1.70 (WACC: 8.6%, terminal growth rate: 1%), implying FY20/21F PE of 21x/16x. We continue to like MYEG given its strong track record for e-gov services and continuous expansion in ancillary business to provide sustainable earnings growth in the long term. In addition, we see the declined in MYEG’s share price since Feb 2020 due to Malaysia turmoil and concern over Covid-19 spread as an attractive buying opportunity as its fundamental remains intact.

Source: BIMB Securities Research - 16 Mar 2020