It has been a sobering week for the e-government services provider, with its share price first crashing 25.5 sen, or 26.7%, to 70 sen on Tuesday, marking a 26-month low dating back to November 2020.
The acute drop occurred after immigration director-general Khairul Dzaimee Daud announced on Monday that all immigration services would be fully back under government management by 2025, implying that MyEG would lose its revenues from providing immigration-related services.
However, the stock recovered slightly from the sharp drop following a share buyback by MyEG, and founder and MD Wong Thean Soon of two million and five million shares respectively. MyEG shares closed 1.5 sen or 2.14% higher at 71.5 sen on Wednesday.
MyEG bought more shares on Thursday, spending RM1.45 million to buy back an additional two million shares at 72 sen each.
The Employees Provident Fund (EPF) also gave MyEG a vote of confidence when it further increased its direct stake in the company to 6.897%, or 512.97 million shares, on Wednesday.
Loke’s hammer blow
Just when MyEG thought that things had stabilised, transport minister Loke Siew Fook delivered another hammer blow yesterday morning.
At around 10.30am, news outlets started reporting Loke as saying private vehicle owners will no longer need to display their vehicle licence (commonly known as road tax) on the windscreen or carry a physical copy of their driving licence, effective immediately.
The two documents will be made available in a digital version via the Road Transport Department’s (RTD) public portal or mobile application MyJPJ, as part of the ministry’s efforts to digitise services offered by the RTD.
That set alarm bells ringing for jittery investors as MyEG provides road tax renewal services which includes the road tax stickers.
At around 11am, the stock started its decline, and quickly turning into a deluge of selling soon after. By the end of trading yesterday, MyEG had fallen 10 sen or 14.69% to 61 sen, valuing the company at RM4.53 bil from RM6.84 billion a week earlier.
It was also the most actively traded stock on Bursa Malaysia on Friday with 787.22 million shares exchanging hands.
FMT Business reached out to MyEG for comment on the impact of the move announced by Loke. At press time, the company had yet to respond to our queries.
Opportunity for bargain hunting?
Despite concerns that MyEG would be negatively impacted in the long run by the loss of immigration services, several research houses are still upbeat about MyEG’s prospects.
MIDF Research has maintained its ‘buy’ recommendation and only reduced its target price to RM1 from RM1.23 previously.
Additionally, there is a consensus that MyEG will likely receive an extension of the concession, providing security up until 2025. Kenanga Research has also maintained a technical buy call on MyEG.
CGS-CIMB Research estimated that the immigration services concession contributed about RM70 million or 18%-21% of annual revenue to MyEG. The figure is higher than Maybank Investment Bank Bhd’s (Maybank IB) estimation of a 10% contribution to FY2023 revenue.
Maybank IB is more bearish than most other firms, noting that there is uncertainty about whether MyEG’s ancillary services can compensate for the potential loss.
“The revenues could fall off only by the second half of 2025 (H2 2025), following the completion and migration of the immigration system to the National Integrated Immigration System (NIISe),” their report read.
These ancillary services are related to foreign worker insurance, job matching and dormitories. Whether the digitisation of road tax will have any significant impact on these forecasts remains to be seen.
MyEG recorded a profit of RM226 million for the year ended Dec 31, 2022, which is down by 36.2% from the year before.
Given that the share price of this profitable company has fallen some 36.5% in just one week, astute investors have been snapping up its shares at a steep discount during MyEG’s week from hell.