KUALA LUMPUR (July 2): Interest in My EG Services Bhd (MyEG) shares rose today following it clinching a three-year extension to provide the foreign worker temporary employment pass online renewal service worth RM208 million.

As of 9.20am, shares in the e-government services firm were up by 2.63% or four sen higher at RM1.56 per share, valuing the company at some RM5.62 billion.

The counter saw 49.48 million shares traded, making it the second most actively traded counter on the local bourse today.

Shares in MyEG opened at RM1.58, before reaching a high of RM1.61 per share shortly after the market opened. It then dipped to RM1.55 but recovered.

Yesterday the group received the extension effective May 23, 2020. The pass in question is known as the pas lawatan kerja sementara under the Immigration Department.

On top of that, MyEG also announced that it will continue to provide e-government services until further notice from the Ministry of Transport. According to the firm, this is as the extension of the agreement with the government for the provision of services to the Road Transport Department has yet to be finalised.

In a note, CGS-CIMB Research's Mohd Shanaz Noor Azam upgraded his call on MyEG to "add" from "hold" with a higher target price (TP) of RM1.80, from RM1.46, following yesterday's developments.

"We upgrade MyEG to an 'add' from 'hold' with a higher RM1.80 TP, based on a higher 24x CY21 P/E (vs 22.4x previously, in line with its five-year historical mean), in view of a stronger earnings base following the concession extension. New e-visa and NIISe contract awards are potential catalysts while delays in e-government service concession and failure to secure e-visa and NIISe contracts are key downside risks to our call," he said.

He added that the research house is raising its FY21 to FY22 earnings per share forecasts by 16% to 19% as it expects stronger earnings from new online services and the potential e-visa project. That said, it could be partially offset by a higher effective tax rate as its pioneer tax status is due to expire in April next year.