This article first appeared in The Edge Financial Daily on June 7, 2018

My EG Services Bhd
(June 6, 80 sen)
Maintain buy with an unchanged target price (TP) of RM1.06: Based on our channel checks, we understand that the pilot stage of the electronic-bidding (e-bidding) services for vehicle plates could begin as early as next month with the actual roll-out of the services in January 2019.

Recall that the newly installed transportation minister repealed the practice of allowing certain non-government organisations to sell special vehicle number plates, and announced the roll-out an e-bidding system from January 2019.

We believe that My EG Services Bhd (MyEG) stands to be the sole beneficiary of e-bidding (which was one of the services under the concession signed in 2000), which can be seamlessly integrated into the existing road transport department’s e-portal which it manages.

The winning of the e-bidding services for vehicle plates would dispel misgivings on its abilities to retain its key government concessions and thus imply that MyEG shows no signs of losing traction with the new government. While revenue from the said service is not major, it allows MyEG to leverage such modest fee-based platforms to upsell commercial services within the same domain.

No changes to our net profit forecast.

Maintain “buy” with an unchanged TP of RM1.06, based on 12.7 times financial year ending June 30, 2019 (FY19) price-earnings (PE), implying -1.3SD which is below its historical mean PE amid current market uncertainty. Our assessed trough valuation is 84 sen per share, based on 10 times FY19 PE. — UOB Kay Hian, June 6