MYEG (0138) : MY E.G. Services - Bonus issue is pleasant surprise
Target RM5.28 (Stock Rating: ADD)
MyEG’s announcement on its proposed 1-for-1 bonus issue was a positive surprise to us. The company last proposed a bonus issue six years ago. We maintain our FY15-17 EPS forecasts and target price of RM5.28, based on an unchanged 21x CY16 P/E (on par with its peer average). We maintain our Add recommendation, with the government’s final approval for the CSTM project and further developments on the road safety diagnostic system project as potential re-rating catalysts.
What Happened
At the end of last week, MyEG proposed a 1-for-1 bonus issue that would increase its issued share base from 600m to 1,200m shares, according to Bursa Malaysia.
What We Think
The proposed bonus issue was a positive surprise to us. The company last proposed a bonus issue in 2008. The proposed bonus issue comes at an opportune time as MyEG’s share price has appreciated close to 500% in the past two years. Apart from improving the stock’s trading liquidity, the ex-bonus share price will also make the stock more attractive to retail shareholders, in our view.
What You Should Do
Remain invested in MyEG. Other than the proposed bonus issue, we believe that there will be more positive newsflow in the near term, as MyEG is likely close to securing the government’s final approval for the custom service tax monitoring (CSTM) project. The CSTM project is expected to be MyEG’s main earnings growth driver over the next few years.
Source: CIMB Daybreak - 03 November 2014
Target RM5.28 (Stock Rating: ADD)
MyEG’s announcement on its proposed 1-for-1 bonus issue was a positive surprise to us. The company last proposed a bonus issue six years ago. We maintain our FY15-17 EPS forecasts and target price of RM5.28, based on an unchanged 21x CY16 P/E (on par with its peer average). We maintain our Add recommendation, with the government’s final approval for the CSTM project and further developments on the road safety diagnostic system project as potential re-rating catalysts.
What Happened
At the end of last week, MyEG proposed a 1-for-1 bonus issue that would increase its issued share base from 600m to 1,200m shares, according to Bursa Malaysia.
What We Think
The proposed bonus issue was a positive surprise to us. The company last proposed a bonus issue in 2008. The proposed bonus issue comes at an opportune time as MyEG’s share price has appreciated close to 500% in the past two years. Apart from improving the stock’s trading liquidity, the ex-bonus share price will also make the stock more attractive to retail shareholders, in our view.
What You Should Do
Remain invested in MyEG. Other than the proposed bonus issue, we believe that there will be more positive newsflow in the near term, as MyEG is likely close to securing the government’s final approval for the custom service tax monitoring (CSTM) project. The CSTM project is expected to be MyEG’s main earnings growth driver over the next few years.
Source: CIMB Daybreak - 03 November 2014
