CLSA Raises Target Price to RM2.80

MYEG is a proxy to digitisation trends, with its latest venture being e-testing (driver’s
test). Coupled with strong Covid-19 testing volume, we forecast 21CL earnings
growth of 18% YoY. This helps offset lower job matches, as businesses are occupied
with new foreign worker regulations. We raise our target price from RM2.25 to
RM2.80 based on a higher target PE multiple of 29x, capturing accelerating
digitisation trends and the removal of concession concerns. We maintain our BUY
rating.

Driven by new services, its 2020 earnings increased 9% YoY to RM268m. This was
within estimates, underpinned by Covid-19 health screening and quarantine
services.

Expanding its services within the road transport department, it will be digitalising future
driving tests. This will involve the installation of cameras and sensors on 2-3k cars, to
automate exercises such as slope tests, reverse parking and parallel parking. Including retakes, there are 1m driver tests conducted annually. The service is targeted for 2H21.

We lift our 22CL earnings 9%, to reflect full-year e-testing revenue. We also revise our assumptions upwards for its Covid-19 testing business, which now conducts 5k tests daily.

We value MYEG at a higher target price of RM2.80 (from RM2.25), based on a
higher target PE of 29x (from 24x) and rolling forward our base year to 22CL.We believe political
concern have been removed given the renewal of its concessions. We believe its
position is now stronger than ever, with new projects secured. We also reflect the faster
digitisation efforts brought by Covid-19.

CGS-CIMB: Reiterate Add, with a higher RM1.96 TP

Expanding service offerings for the Road Transport Department

MYEG is introducing new services for the Road Transport Department
(RTD), namely: 1) online renewal of motorcycle road tax, and 2) online renewal of
competent driving licences (CDL). The latest development is not a surprise, given that MyEG has mentioned that it is exploring new online services, leveraging on the government’s plan to accelerate consumer adoption of e-government services, especially with the ongoing Covid-19
pandemic;

Raising FY20-22F EPS by 6-8%

MyEG estimates that RTD processed about 10m motorcycle
road tax renewals per annum. Assuming that MyEG captures 10-20% market share of
users to take up its full bundle service — which includes online road tax renewal,
insurance and delivery fee — at a potential RM30 ARPU, MyEG could fetch RM30m-60m
revenue per annum. We raise our FY20-22F EPS by 6-8% to reflect earnings contribution from these new services.

Bigger monetisation potential from Covid-19 screening service

MyEG sees attractive monetisation prospects from its Covid-19 screening service,
following the government’s new regulations requiring returning Malaysians and travellers
from overseas to pay for their Covid-19 screenings since Jul 20. We understand that the
fee for the polymerise chain reaction (PCR) test is set at RM150 for Malaysians and
RM250 for foreigners. To recap, MyEG has conducted 150k Covid-19 test screenings,
booked through its one-stop portal, since it was launched in early-Jun.

Reiterate Add with a higher RM1.96 TP, still based on 24x CY21F P/E, in line with its 5-
year mean. Winning the Visa Luar Negara and National Integrated Immigration System
(NIISe) contracts and higher-than-expected earnings contribution from its Covid-19
screening service could re-rate the stock