MYEG (0138) - 2 Points to Consider Before Investing in MyEG

MYEG (0138) - 2 Points to Consider Before Investing in MyEG

MyEG Services Berhad is a concessionaire for the Malaysian E-Government MSC Flagship Application. It provides the electronic link between the Government and citizens/businesses. Essentially, MyEG offers the Malaysian public a single point of contact between the Government and the people it serves. Besides, it also provides the opportunity to dynamically interact with numerous agencies within the Federal, State and the Local Government machinery, providing services ranging from information searches to licence applications.

So what are the 2 points to consider before investing in MyEG?

#1. MyCC fined MyEG RM2.27million

The Malaysia Competition Commission (MyCC) fined MyEG for abusing its dominant position in the way it manages the online foreign workers permit (PLKS) renewals. For more information, you may read it HERE.

MyEG is in a near-monopoly position with strong support from the government as a concessionaire. The lesson is that it is not always good to be in a monopolistic position because it will trigger unnecessary attentions.

#2. Receivables ratio SHOT up to 51% as of 2015

In FY2015, for every RM of sales made, MyEG had RM0.51 of receivables. In other words, revenues increased by 29% but trade receivables increased by 282%! Yet, the management did not provide satisfactory explanations in the annual report.

More often than not, when companies find it hard to increase sales, they loose credit terms to attract more sales. The BIG jump in receivables ratio is something that an investor needs to take into account before investing.


Source: Bursa Market Place

MyEG has certainly made incredible returns to its shareholders over the past 3 years. Whether to buy, sell or continue to hold on to MyEG, I think the above 2 points should not be ignored by the investors.
MYEG (0138) - 2 Points to Consider Before Investing in MyEG