KUALA LUMPUR (April 9): MyEG Services Bhd was among the top decliners on Bursa Malaysia today, coming down by as much as 4.66% after a downgrade by CIMB Investment Bank for the first time in four years.

At 3.30pm, MyEG was trading at RM2.68 — down 11 sen or 3.94% — with a total of 12.09 million shares done, giving it a market capitalisation of RM9.70 billion.

Based on its closing price on Friday (April 6), the stock has risen about 26% year-to-date, from RM2.22 on Dec 29.

CIMB analyst Nigel Foo downgraded MyEG from “Add” to “Hold” with an unchanged target price of RM3.04, noting the stock’s valuation is not cheap at 32.2 times currently.

“We believe at current share price levels, most of the good news has already been reflected in its share price and we do not see any positive catalyst surprises over the next few months for the stock,” said Foo in a note.

Key support is seen at between RM2.88 and RM2.24.

“As long as the support trendline at RM2.88 holds, the stock’s medium-term uptrend remains,” Foo added.

Meanwhile, CIMB has maintained its earnings forecasts for MyEG based on 25.2 times 2019 forward price earnings ratio, a 20% premium to the technology sector, to reflect its large market capitalisation and strong earnings per share compound annual growth rate (CAGR) of 36% for 2018-2020.

MyEG is said to reap RM500 million annually on full installation of Phase 2, which means a profit before tax (PBT) contribution of RM100 million to RM125 million annually, assuming a 20%-25% PBT margin.

However, any delay in the launch of its the goods and services tax monitoring (GSTM) Phase 2 project — its major cash cow slated to commence operations mid-2018 — could bring earnings disappointment for the company, Foo warned.