KUALA LUMPUR (Dec 10): MyEG Services Bhd's share price fell more than 4% in morning trade on Bursa Malaysia today after the e-government services provider announced yesterday its proposed placement of up to 220 million (220,000,000) new shares to raise funds to finance, among others, the company’s purchase of fixed assets and related solutions for its e-government concession.
At 9.07am today, MyEG’s share price was nine sen or 4.59% lower at RM1.87 as investors weighed the prospect of earnings per share (EPS) dilution for the company as a result of an increase in the number of its shares arising from the new share placement to third-party investors.
The stock saw some four million shares traded. At RM1.87, MyEG had a market capitalisation of about RM6.55 billion based on the company’s latest reported number of issued shares at around 3.5 billion units.
Yesterday, MyEG said in a Bursa filing the placement will entail the issuance of up to 220 million new shares, representing up to about 6.29% of the total number of issued MyEG units.
"The proposed placement is not expected to have any material effect on earnings of the group for the financial year ending Dec 31, 2020 (FY20) as the use of proceeds may take some time before they can create an impact on the group. EPS of the group will be diluted correspondingly as a result of the increase in the number of MyEG shares arising from the proposed placement,” the company said.
Today, MIDF Amanah Investment Bank Bhd analyst Martin Foo Chuan Loong wrote in a note that the research house, however, views MyEG's new share placement as a better funding option compared to borrowings.
"[We] maintain [our] 'neutral' (rating of MyEG shares) with a revised target price (TP) of RM2,” Foo said.
He said MIDF’s previous TP for MyEG stood at RM1.58.