MYEG (0138) - MY E.G. Services - Time may resolve FWPR issues?
Target RM3.90 (Stock Rating: ADD)
Over the past two days, The Star highlighted some developments regarding MyEG’s online foreign workers permit renewal services (FWPR). We believe it would take some time for the public to understand the convenience provided and MyEG’s responsibilities from offering FWPR services . We maintain our EPS forecasts and target price, which is still based on 21x CY16 P/E (in line with its peers). The successful launch of the custom service tax monitoring (CSTM) project and public acceptance of its FWPR services are potential re-rating catalysts for the stock. We retain our Add call on MyEG.
What Happened
Over the past two days in the The Star daily, there were two articles regarding MyEG. In one, MyEG assured employers of domestic maids that they stand to gain the most by using the company’s online foreign worker annual working permit renewal services (FWPR). A spokesman for the company said the critics were mainly maid agencies guarding their turf (maid agencies charge anywhere between RM100 and RM200 per renewal). In the other, The Star quoted Minister in the Prime Minister’s Department Datuk Wee Ka Siong as saying that the cabinet is expected to discuss MyEG's FWPR services at its meeting next week. The daily also indicated that the lack of computer literacy seemed to be the stumbling block to employers adopting MyEG’s FWPR.
What We Think
We believe employers and maid agencies just need some time to get used to MyEG’s FWPR. Looking at the bigger picture, with FWPR, MyEG is responsible for compiling and maintaining a database of foreign workers (legal and illegal) and identifying legal foreign workers and employers who hire illegal workers. The company will also bear the deportation costs for illegal foreign workers detained. We believe the cabinet understands the bigger issues involved. In addition, MyEG’s FWPR fee is only a small part of the overall fees charged to an employer (Figure 2), which is a small price to pay for convenience.
What You Should Do
Remain invested in the stock. We believe in time, most of the issues related to using MyEG’s FWPR should be resolved. The key importance is MyEG’s responsibility to keep track of the illegal foreign workers in this country, which is a major concern in this country. In Mar, the custom service tax monitoring service (CSTM) Phase 1 (c0vering F&B and entertainment outlets) nationwide and if all goes well, MyEG could proceed with CSTM Phase 2 (covering the retail sector in 2016).
Source: CIMB Daybreak - 20 January 2015
Target RM3.90 (Stock Rating: ADD)
Over the past two days, The Star highlighted some developments regarding MyEG’s online foreign workers permit renewal services (FWPR). We believe it would take some time for the public to understand the convenience provided and MyEG’s responsibilities from offering FWPR services . We maintain our EPS forecasts and target price, which is still based on 21x CY16 P/E (in line with its peers). The successful launch of the custom service tax monitoring (CSTM) project and public acceptance of its FWPR services are potential re-rating catalysts for the stock. We retain our Add call on MyEG.
What Happened
Over the past two days in the The Star daily, there were two articles regarding MyEG. In one, MyEG assured employers of domestic maids that they stand to gain the most by using the company’s online foreign worker annual working permit renewal services (FWPR). A spokesman for the company said the critics were mainly maid agencies guarding their turf (maid agencies charge anywhere between RM100 and RM200 per renewal). In the other, The Star quoted Minister in the Prime Minister’s Department Datuk Wee Ka Siong as saying that the cabinet is expected to discuss MyEG's FWPR services at its meeting next week. The daily also indicated that the lack of computer literacy seemed to be the stumbling block to employers adopting MyEG’s FWPR.
What We Think
We believe employers and maid agencies just need some time to get used to MyEG’s FWPR. Looking at the bigger picture, with FWPR, MyEG is responsible for compiling and maintaining a database of foreign workers (legal and illegal) and identifying legal foreign workers and employers who hire illegal workers. The company will also bear the deportation costs for illegal foreign workers detained. We believe the cabinet understands the bigger issues involved. In addition, MyEG’s FWPR fee is only a small part of the overall fees charged to an employer (Figure 2), which is a small price to pay for convenience.
What You Should Do
Remain invested in the stock. We believe in time, most of the issues related to using MyEG’s FWPR should be resolved. The key importance is MyEG’s responsibility to keep track of the illegal foreign workers in this country, which is a major concern in this country. In Mar, the custom service tax monitoring service (CSTM) Phase 1 (c0vering F&B and entertainment outlets) nationwide and if all goes well, MyEG could proceed with CSTM Phase 2 (covering the retail sector in 2016).
Source: CIMB Daybreak - 20 January 2015
