MyEG stake in Stampede not likely to impact earnings significantly

KUALA LUMPUR: Analysts believe My E.G. Services Bhd’s (MyEG) associate stake in Stampede Holdings Sdn Bhd (Stampede) is not likely to significantly impact the parent company’s earnings.

As MyEG is only acquiring an associate stake in Stampede, the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) did not expect the earnings contribution from Stampede to significantly impact the earnings of the group in the near term.

“We are of the view that the bulk of MyEG’s earnings would still come from its traditional core businesses,” MIDF Research said.

As such, the research arm maintained its earnings estimates at this juncture.

MID F Research also maintained its target price of RM2.10 per share.

“MyEG has an attractive business model which reap a healthy profit margin of more than 50 per cent.

We are of the view that the bulk of MyEG’s earnings would still come from its traditional core businesses.

MIDF Research

“This will also be further supported by foreign worker hostel accomodation business,” the research arm said.

While MyEG has been actively investing in various technology businesses such as Agmo Studios, FashionValet and Hurr.tv, MIDF Research did not expect the earnings contribution from such investments to be meaningful in the near term.

On another note, the research arm expected dividend yield to remains unattractive at approximately one per cent.

In the absence of key rerating catalysts, MIDF Research maintained its neutral recommendation on the stock.