• MYEG received 2-year contract from the Ministry of Health to undertake the provision of online payment of Covid-19 screening test and quarantine charges for inbound travellers.

• Despite no processing fee charged under this project, management guided that MYEG will monetise via Covid-19 screening tests through its collaboration with panel clinics and ancillary services i.e. meet and greet services and upgrading quarantine premise to hotel.

• No change to earnings forecast pending details from the management. Still, we are confident over MYEG’s capabilities to manage this project given its proven track record in handling ad hock basis projects.
   
• Maintain BUY with DCF-derived TP of RM1.70 (WACC: 8.6%, terminal growth rate: 1%), implying FY20/21F of 21x/16x.

Digitalise administrative Covid-19 processes for inbound travellers

MYEG received a Letter of Acceptance (LoA) from the Ministry of Health on 8 October 2020 to undertake the provision of online payment of Covid-19 screening tests and quarantine charges for inbound travellers, both Malaysians and non-Malaysians. The project is aimed to enhance the administrative process for Covid-19 screenings and designating quarantine locations for travellers. The tenure of the project will be 2 years, effective from 1 November 2020.

Growing ancillary business

We are positive on the announcement as we see this will improve the process of administrating Covid-19 screenings and designating for inbound travellers. Management noted that no processing fee is charged under this project but, MYEG will monetise via Covid-19 screening tests through its collaborations with panel clinics and ancillary services i.e. meet and greet services and upgrading quarantine premise to hotel.

Proven track record in handling ad-hock projects

We make no changes to our earnings forecast for now pending details from the management. Still, we are confident on MYEG’s capabilities to manage this project given its proven track record in handling ad-hock basis projects i.e. Foreign Worker Rehiring Program (FWRP), illegal foreign workers voluntary repatriation, Covid-19 contact tracing in the Philippines and Jakarta province and ‘One-Stop’ portal for Covid-19 screening of workers.

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 believe this is fair owing to its growing ancillary business amid the pandemic. We see the decline in MYEG’s share price at current level as an attractive buying opportunity as its long-term fundamentals remains intact.

Source: BIMB Securities Research - 9 Oct 2020