• My E.G Services Berhad (MYEG) management clarified that there has  never been a discussion or meeting being held with either the Ministry of Home Affairs (MoHA) or Immigration Department of  Malaysia regarding the intention to converge all immigration  transactions under the National Integrated Immigration System (NIISe) as reported in the media yesterday.

• In the event of MYEG’s immigration services being replaced by NIISe  by 2025, we foresee only its foreign worker renewal permit services  that would be affected where this is equivalent to only 5-7% of  MYEG’s total revenue.

• Reiterate our BUY call on MYEG at a TP of RM1.20, pegged at 22x to  2023F EPS of 5.5 sen. The sharp decline in MYEG’s share price offers  an opportunity for investors to accumulate the stock given its  attractive total return of >70%

No Discussion to Converge all Immigration Services under the NIISe

MYEG’s share price has taken a significant beating yesterday following  news article that appeared on Free Malaysia Today (FMT) and New Straits  Times (NST) which stated that all MYEG immigration processing services  would be replaced by the National Integrated Immigration System (NIISe)  by 2025. MYEG management however clarified that has never been a  discussion or meeting being held with either the Ministry of Home Affairs  (MoHA) or Immigration Department of Malaysia regarding the intention  to converge all immigration transactions under the NIISe.

Minimal Impact on MYEG’s Earnings If It is the Case

Notwithstanding that, in the event of MYEG’s immigration services being replaced by NIISe by 2025, we foresee only its foreign worker renewal  permit services that would be affected, where this is equivalent to only  5-7% of MYEG’s total revenue. While its concession services might be  affected, we believe its ancillary services offered under Immigrationrelated services i.e., foreign worker insurance (RM100/worker),  accommodation (RM100/bed/month), job matching and placement  (approximately RM2,000/successful job matching) would remain solid  given MYEG’s ‘first mover advantage’. Note that, MYEG is no longer  heavily dependent on the government’s concession services for its  ancillary services and commercial business. In any case, MYEG’s  concession segment contributes only 13-15% of MYEG’s total revenue

Reiterate BUY at a TP of RM1.20

Reiterate a BUY call on MYEG at unchanged TP of RM1.20, pegged at 22x  to 2023F EPS of 5.5 sen. The sharp decline in MYEG’s share price offers  an opportunity for investors to reaccumulate on the stock. MYEG is a BUY with total return >70%.

Source: BIMB Securities Research - 8 Feb 2023