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MyEG gaps down at opening on news it won't be involved in immigration matters by 2025; Iris sees jump in interest

Publish date: Tue, 07 Feb 2023, 10:41 AM

KUALA LUMPUR (Feb 7): MyEG Services Bhd gapped down on market opening to 65.5 sen on Tuesday, down 30 sen or 31.41% from Friday's close, following news reports that all immigration services and process will revert back to the Immigration Department by 2025, including those being managed by third parties such as MyEG.

This is because of the implementation of the national integrated immigration system or NIISe, which will converge all immigration transactions, including passport renewals, visa applications, applications and renewals of permits for foreign workers, according to the New Straits Times on Monday.

Immigration Director General Khairul Dzaimee Daud was quoted as saying that the Home Ministry has set aside RM900 million for the rollout of NIISe in two years, and that the new system is expected to be a "game-changer" that would improve the department's efficiency and customer experience.

NIISe, which is currently developed by Iris Corp Bhd, will replace the current Malaysian Immigration System (myIMMS) that the department has been using for about 13 years.

Iris, conversely, gapped up to 13.5 sen from 12.5 sen at Friday's close, and jumped to as high as 19 sen. It is now trading at 16.5 sen, up 32%, with 131.95 million shares traded. It is the second most active stock of the morning, after MyEG, which saw 380.78 million shares done.

Affin Hwang Investment Bank said in a note on Tuesday that the news is negative for investor sentiment and may affect MyEG's long-term earnings trajectory. It downgraded the stock to 'hold' from 'buy', and cut its 12-month target price on the stock to 93 sen from RM1.23.

"That said, we believe there could be changes in the timeline of NIISe's deployment and there may be business opportunities for MyEG and its peers," it said.

While it maintained its earnings forecast on the stock, it lowered its valuation multiple to 19 times its estimated 2023 price earnings ratio - from 25 times - due to heightened policy risks.

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