KUALA LUMPUR (July 11): My EG Services Bhd (MyEG)'s share price dropped as much as 15 sen or 8.02% today as the company's illegal foreign worker (IFW) registration fell below target.

At 3.22pm, the counter was down 10 sen (5.35%) at RM1.77, with 25.69 million shares changing hands, for a market capitalisation of RM4.33 billion.

According to a July 1 report by CIMB Research, MyEG only registered around 300,000 IFWs as at the closing date of June 30, which is 70% below the research firm's one million target.

"MyEG has indicated in the past its management would not be able to handle the registration of IFWs and the launch of the goods and services tax monitoring project (GMP) at the same time.

"We expect the rehiring programme to continue for another few months and the launch of the GMP to be postponed from July 2016 to January 2017, a six-month delay," wrote CIMB Research.

The firm added it has assumed in its earnings forecast for MyEG that the government would reach registration of 1 million IFWs by the financial year ending June 2017 (FY17).

"This would mean MyEG would register an additional 700,000 IFWs in FY17, which is possible.

"We cut FY16 to FY18 forecasted earnings per share by 20% to 27% to take into account the slower-than-expected IFW registration and the expected six-month launch delay of the GMP project. After the downward EPS revisions, our target price falls from RM2.83 to RM2.31, based on an unchanged 2017 forecasted price earnings of 21 times, in line with its peers," said CIMB Research.