Friday 29 Mar 2024
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KUALA LUMPUR (July 12): CIMB IB Research is keeping its “Add” call on the MY E.G. Services Bhd (MYEG) with the unchanged target price (TP) of RM1.22, on the back of two positive developments for the company.

In a note July 11, the research house said during a recent meeting with MYEG managing director Wong Thean Soon, Wong informed the attendees with three recent company’s updates, mainly : i) MyEG plans to start operations in Bangladesh by year-end; ii) it will commence remittance services next month and iii) The 5-year concession for all its services will be due in May 2020.

The research house said MYEG’s plan to expand its footprint into Bangladesh and start its remittance services was a “positive surprise”. However, the research house said they did not assume any potential contribution from these two developments pending for more material information from these developments.

MYEG’s is targeting countries with populations of above 100 million to provide e-services, prior to this latest development, the company has entered the Philippine market in early-2017.

On another note, MYEG said the renewal of the concession is a straightforward process. Its five years concession for all services will be due by May 2020.

“A few months before the May 2020 concession expiry, MyEG will be writing to the government to inform the latter that it intends to extend the concession for another five years,” the company said.

The research house was told that MYEG has the first-mover advantage and dominant position in the market to compete with new players, as the government initiated the liberalisation of the domestic car road tax and foreign worker working permit. with MYEG. On the same note, the bulk of its revenue generated from the sale of insurance service, which indicates the company is not exposed to the risk of over dependant on government service. Currently, the insurance sales contribute 30 to 35% to the group’s revenue.

At 10.36am, MYEG share price traded higher by 1.5 sen or 1.89% at 81 sen, with 9.09 million shares done, bringing a market capitalisation of RM2.82 billion.

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