This article first appeared in The Edge Financial Daily on August 6, 2018

My EG Services Bhd
(Aug 3, RM1.17)
Downgrade to hold with an increased target price (TP) of RM1.27: While the pilot stage of e-bidding services for vehicle plates which was supposed to commence on Aug 1, 2018 was delayed, the actual rollout of the service is still targeted for January 2019. Understandably, the pilot project will require My EG Services’ (MyEG) back-end operating system, hence increasing the possibility of MyEG becoming a beneficiary of e-bidding services when the ministry of transportation (MoT) announces the project winner later this year.

Recall that the newly-formed MoT repealed the practice of allowing certain non-government organisations to sell special vehicle number plates, and announced the rollout of an electronic bidding system from January 2019. We remain convicted that MyEG stands to be a key beneficiary of e-bidding.

After the long drawn-out talks with regulators and foreign currency licensees, we understand that MyEG is ready to roll out remittance services for foreign workers by third quarter of 2018 (3Q18). The group will be able to rake in an undisclosed amount of transaction fees and forex spreads when the venture takes off. This business has huge potential given that the annual remittances outflows are worth about RM36 billion.

The new government has embarked on various clean-up processes to ensure efficiency and effectiveness that inadvertently slowed down the entry of foreign workers into Malaysia. The ministry of human resources has proposed to revert the current system of hiring foreign workers to the government-to-government approach without any middlemen, such as private company Bestinet which has received bad press of late (allegations that it has profited too much on its monopoly). — UOB Kay Hian, Aug 3