MyEG revised down due to possible contract termination

KUALA LUMPUR: MyEG Services Bhd’s share prices have plunged as much as 71.3 per cent since Pakatan Harapan’s stunning victory in the 14th General Election (GE14) on May 9.

Once a stock market darling, the company is now staring at difficult days ahead with uncertainty hanging over its concession business, especially immigration-related contracts, said analysts.

MyEG provides e-government services, including the issuance and renewal of driver’s licences, renewal of vehicle road tax, renewal of foreign workers permits and traffic offence summons payments, to several government departments.

It earn a small transaction fee for each transaction it processes. Immigration-related services accounted for more than 60 per cent of MyEG’s total revenue.

Its foreign worker contracts will expire in 2025 or 2028, although there is a possibility the contracts will end prematurely.

Macquarie Equities Research (MQ Research), which had spoken to MyEG’s management, said it was possible the government would open up the business before the contracts were due.

Given this expectation, MQ Research had reduced MyEG’s market share for e-government related services to 20 per cent, from 95 per cent currently.

It also revised downwards its target price to RM1, but upgraded the stock to “outperform”.

“The only catalyst for MyEG is greater market share for concession businesses and locking in Sales and Service Tax electronic monitoring system project,” it added.

MyEG, which was trading at RM2.58 on May 8, hit its lowest in the ensuing three-week period to 76 sen on May 25.

Its shares crashed when the market reopened on May 15, trading at 29.9 per cent, or 77 sen, lower at RM1.81.

Over the next two weeks, MyEG shares reached an intraday-low of 74 sen, a massive 71.3 per cent drop.

Prior to GE14, its share price had grown eleven-fold on the back of strong rising revenue and net profit in the last five years.

MyEG shares closed 3.37 per cent, or three sen, lower at 86 sen on Friday with 115.75 million shares transacted.