Stocks battered by GE14 tsunami

THE unprecedented electoral victory by Pakatan Harapan was unfavourable to many stocks as it was favourable to others.

These counters, also known for their political links but with the previous Barisan Nasional government, mostly had high exposure to government contracts and were therefore hammered as investors frantically sold off their stakes after the market reopened for trading on May 14.

Now that a new government-of-the-day is in power and is undertaking a review on several national mega infrastructure projects, observers have cast doubts on the prospects of these stocks.

MyEG Services Bhd was the biggest loser post-GE14, as the counter lost nearly 65% over the period of May 8 to May 17.

Controlled by billionaire investor Wong Thean Soon, who is also its managing director, MyEG is well known for its close ties with the previous ruling party.

Among the e-government services offered by the company are road tax and motor vehicle insurance renewal, foreign workers’ permit renewal and zakat collection.

However, it is worth noting that despite MyEG being seen as a government concession by many, currently, some 80% of its revenue is derived from non-government-related products and services.

Speaking with StarBizWeek, Wong says he believes that MyEG will continue to be a leading e-government services provider, moving forward.

“MyEG, as a service provider to the government, has to work for the government of the day.

“We believe that we are a professional organisation that will continue to provide a high level of service to the government, moving forward,” says Wong.

The stock is now trading at a price earnings ratio of 14.5 times from its previous 45 times before the election.

UOB Kay Hian Malaysia Research has upgraded MyEG to a “buy on weakness”.

Second to MyEG, George Kent (M) Bhd (GKent) lost 62% in its share value to RM1.51 from May 8 to May 17.

The construction outfit is the project delivery partner for the Light Rail Transit project from Bandar Utama to Klang.

Early this year, GKent collaborated with four foreign companies to form a consortium to bid for the High Speed Rail project.

Another consortium which it is involved in, made of Gamuda-MMC-George Kent, is also seen as a strong contender to secure the Mass Rapid Transit 3’s Circle Line turnkey contract.

In an apparent knee-jerk reaction, investors sold-down GKent shares considering its heavy exposure to the domestic construction segment.

For context, in the financial year of 2018 ended January 31, GKent’s construction and infrastructure businesses constituted about 75% of its top line.

Moving forward, if the projects which involve GKent are continued without much