• 9M earnings soared 103% yoy to RM91m. MYEG’s 3Q16 PATAMI grew 74 % yoy to RM33.1m (+10% qoq and 103% 9MYTD) on the back of a 80% jump in sales to RM70m (+10% qoq and 102% 9MYTD). Management viewed that the continued growth in volume of its existing services especially online renewal of foreign workers ’ ins urance and foreign worker s ervices is expected to continue contributing positively to future earnings. While concession services continue to be its core business, non-concession services which are relevant to Malaysians, such as the road safety diagnostic kit, will continue to be one of its main focus es of growth as more Malaysians adopt online government services as a convenient and cheaper alternative to transact with the Government.

• Technically speaking. We see positive risk to reward ratio with 16.1% upside against 7.3% downside. Following its 1-month sideways consolidation within RM1.90-2.00 band, the stock is ripe again to launch another wave of uptrend to stage a triangle breakout above the LT downtrend line of RM2.08 soon, supported by uptick in daily and weekly oscillators.

• A decisive breakout above RM2.08 could take the next leg up towards RM2.14 (31 Mar high), RM2.25 (weekly upper Bollinger band) and our LT objective at RM2.38 (52-week high). Key supports are RM2.00 (psychological level) and RM1.91 (38.2% FR). Cut loss at RM1.90.

Source: Hong Leong Investment Bank Research - 31 May 2016