In separate notes today, MIDF Research and BIMB Securities reaffirmed their “buy” calls on the counter, with target prices of RM1 and RM1.15 respectively.
At noon break, the counter had risen 5.19% or 4 sen to 81 sen.
BIMB is bullish on the counter, remarking that the stock is trading at 14 times its price earnings ratio (PER) versus its historical forward average PER of 17 times.
“We deem this as unfair and believe MyEG deserves to trade at a premium given its robust earnings outlook within the foreign worker segment (such as job matching and placement, and renewal permit) following the full reopening of international borders,” it said.
The opinion was shared by MIDF, which reiterated that the group’s impressive track record makes it likely they will secure another three-year extension for the e-government concession next month.
MyEG Services Bhd recently secured a contract to build a workers’ village in Batu Kawan, Penang, which is expected to produce favourable outcomes for the group.
The company received the letter of acceptance from Penang Development Corporation yesterday to set up a workers’ village (accommodation facilities) at Batu Kawan Industrial Park 3.
At the end of March, the group secured a partnership with East Logistic-Link Co Ltd, a wholly-owned agency of China’s customs department.
The deal, which involved MyEG’s blockchain platform Zetrix, lifted the company’s share price as much as 8.9% or 6.5 sen from a close of 73 sen on March 30, to a high of 79.5 on March 31.
It was a welcome respite from a harrowing week in February (Feb 6 to Feb 10) which saw its share price tumble 36.5% and its market capitalisation shrinking by RM2.31 billion.
The share price had first crashed 25.5 sen, or 26.7%, to 70 sen on Feb 7, marking a 26-month low dating back to November 2020.
The acute drop occurred after immigration director-general Khairul Dzaimee Daud had announced on Feb 6 that all immigration services would be fully back under government management by 2025.
Later on Feb 10, transport minister Loke Siew Fook announced that private vehicle owners do not need to display their vehicle licence (commonly known as road tax) on the windscreen or carry a physical copy of their driving licence.
As MyEG provides physical road tax renewal and delivery services, the government’s digitisation move did not appear to bode well for the company.
A deluge of selling followed on the same day which turned MyEG into the most actively traded counter with 787.22 million shares exchanging hands.
By the day’s end, MyEG had fallen 10 sen or 14.69% to 61 sen, valuing the company at RM4.53 billion from RM6.84 billion a week earlier.
New workers’ village contract
The group’s subsidiary MyEG Lodging Sdn Bhd will lease an 8.39-acre land for RM20.39 million over a duration of 30 years to build and operate the workers’ village and related facilities at its own cost.
The village will be able to accommodate around 7,500 foreign workers.
In addition, the workers’ village is required to comply with the labour department’s regulations and gain green rating for an Integrated Habitat Assessment – Real Estate certification.
“The accommodation will adopt a dormitory-style arrangement and the capex (capital expenditure) is projected to be RM12,000 per bed, resulting in a total capex of RM90 million.”
“Upon completion of the workers’ village, MyEG is anticipated to generate approximately RM14.4 million annually at 80% occupancy and RM18 million at full occupancy through rental fees,” said BIMB Securities.
The group has indicated that it will charge RM200 per bed per month. BIMB believes that the 80% occupancy rate is realistic and will be easily achieved.
“While we are positive on the announcement, we make no changes to the company’s earnings forecast as it is still in the early stage of development,” it said.
Moving forward, BIMB anticipated this project will generate an additional revenue stream for the company through the offering of value-added services to both employers and workers.
Despite uncertainties regarding the finalisation of the national integrated immigration system this month, both research houses foresaw that MyEG will perform well regardless of the outcome.
At noon break, MyEG’s share price rose 5.19% or 4 sen to 81 sen, giving it a market capitalisation of RM6.02 billion.