Friday 29 Mar 2024
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KUALA LUMPUR (Dec 8): My EG Services Bhd (MyEG) continues to climb this morning, rising as much as 15 sen or 7.89% to RM2.05, the highest level since May 2018, after the group emerged as the latest potential proxy for Covid-19 vaccine play.

At 11.24am, the counter pared some gains at RM1.98, still up 8 sen or 4.21%. The stock has risen by over 73% year-to-date.

The counter saw 37.48 million shares changed hands, making it one of the most actively traded stocks this morning.

Yesterday, MyEG shares rose as much as 17.4% in the morning, and pared some of the gains to close 4.97% or nine sen higher at RM1.90, with some 114.9 million shares transacted. 

CGS-CIMB’s analyst Mohd Shanaz Noor Azam said in a note today he believes the potential to commercialise Anhui Zhifei Longcom Biopharmaceutical Co Ltd (Zhifei)’s Covid-19 vaccine will strengthen MyEG’s position as a one-stop centre to manage the logistics and administrative challenges for Covid-19 testing and vaccination to ensure effective implementation in the ongoing battle against the pandemic.

He also gathered from the management that MyEG is allocating RM4 million to RM5 million capital expenditure to appoint a clinical research company to carry out the Phase 3 trials in Malaysia, under the supervision of Ministry of Health (MoH) institute for clinical research and clinical research Malaysia.

“In addition, management said that it has not determined the average selling price for the vaccine, but it expects to be competitive in the market. For example, we learnt that Pfizer-BioNTech’s vaccine price is set at US$19.50 per dose. Malaysian government through MoH has already entered into a purchase agreement with Pfizer to secure 12.8 million doses to immunise 6.4 million Malaysians in 2021,” he said.

According to him, the management also highlighted that Zhifei’s vaccine is a protein-based vaccine that does not require low-temperature storage, compared to mRNA developed vaccines like Pfizer-BioNTech and Moderna’s vaccine candidates, which may require higher distribution costs due to lower-temperature storage requirement.

Meanwhile, he said, MyEG is also targeting to distribute the vaccine among the global Muslim population given that the group is also working to achieve halal status certification from the Department of Islamic Development Malaysia (JAKIM).

The group believes that JAKIM’s halal accreditation will ensure increased acceptance of the vaccine among the global Muslim population, he noted.

“We keep our earnings forecasts as we believe it is too early to estimate the potential impact of the vaccine deal,” said Mohd Shanaz.

However, he retained an "add" call on MyEG with a target price of RM2.50. The target price is still based on 23 times 2022 price to earnings (PE), in line with MyEG’s five-year historical mean.

“The potential commercialisation of halal Covid-19 vaccine, the extension of tax incentives and introduction of travel bubbles by the government allowing tourists to enter Malaysia are potential re-rating catalysts.

“Meanwhile, delays in border reopening and in the recovery in tourist arrivals, which could impact the take-up of MyEG’s MySafeTravel platform, are key downside risks,” he said.  

UOB Kayhian’s analysts Vincent Khoo and Jack Goh also said in a note today that since Malaysia’s halal certification is well recognised globally, MyEG’s distribution of Zhifei’s halal vaccine has a tremendous potential of tapping into the 1.3 billion Muslim population globally.

They noted the vaccine initiation is part of MyEG’s holistic approach and plays a vital role in facilitating cross-border travels, and alongside several emerging catalysts to fuel earnings growth in FY21 and beyond, they foresee further re-rating for MyEG.

According to them, MyEG is poised for several legs of earnings growth, which include: a trifecta of revenue streams from MySafeTravel related services, resumption of matching services on the foreign worker redeployment programme, re-enactment of the foreign worker amnesty programme, expansion of its e-government services, and potential revival of the goods and services tax (GST) system.

They maintained "buy" call on MyEG with a higher (blue-sky) target price of RM2.60 from RM2.12.

“The target price is pegged at 25 times FY21 PE. There will be further upside to our target price should MyEG clinch the National Integrated Immigration System contract or successfully extend its tax incentive status,” they said.

They also noted the possibility of reintroduction of GST could benefit MyEG. It was reported that Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz had said a committee will be set up to study various revenue-enhancing measures, which include mulling over the reinstatement of the GST.

MyEG announced yesterday that it had entered into a cooperation with Zhifei to obtain Malaysian halal certification for the Chinese biopharma company’s Covid-19 vaccine and to exclusively distribute the vaccine in Malaysia for a three-year period.

It said the two companies had signed a memorandum of understanding, agreeing to cooperate in conducting Phase 3 clinical trials of Zhifei’s vaccine in Malaysia and in achieving compliance with halal status requirements to secure halal certification from JAKIM.

MyEG said the commencement of the Phase 3 trials will make Zhifei’s vaccine one of the first to undergo the final-stage trials in Malaysia under the purview of the MoH.

Edited ByJoyce Goh
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