MyEG concession may be extended

NST Thu, Feb 09, 2023 09:14am - 1 year View Original


KUALA LUMPUR: MY E.G Services Bhd expects its concession to handle foreign workers and maids applications and renewals will be maintained at least until 2025, according to its chief executive officer Wong Thean Soon.

Analysts briefed by Wong following reports suggesting that MyEG would no longer be involved in the immigration concession by 2025, also said the market had overreacted to the news.

MyEG saw its share slump 27 per cent on Tuesday after the New Straits Times disclosed that all immigration-related affairs, including those now being managed by outside parties, would be managed by the Immigration Department directly once the new National Integrated Immigration System (NIISe) went live by 2025.

Besides passport renewals and visa applications, these would also include applications and renewals of foreign workers' permits and maid permits.

"We think the market overreacted to the NIISe news (share price down 27 per cent)," CGS-CIMB Research analyst Mohd Shanaz Noor Azam wrote after hosting a conference call with Wong on Feb 7.

CGS-CIMB believes MyEG stands to receive another extension to its immigration-related services concession due in May 2023, given that NIISe which, is developed by Iris Corp Bhd, would not be ready anytime soon.

"We believe this is the optimal outcome in the near-term given that we do not expect the government to immediately replace the incumbent service providers and risk a public backlash if the new system fails to deliver," CGS-CIMB said today.

The firm estimated that the immigration services concession contributed about RM70 million in annual revenue to MyEG, based on the last extension worth RM208 million for three years signed in 2020.

In addition, MyEG also provides other services related to foreign workers that are not covered under the concession, such as foreign worker insurance, job matching and placement, and dormitories.

"We estimate these ancillary services contribute another RM70 million in annual revenue to the group.  Hence, we estimate the immigration services transactions will account for 18-21 per cent of MyEG's financial year 2023 (FY23)-24F revenue and profit after tax," CGS-CIMB said.

Maybank Investment Bank Bhd (Maybank IB) said the related concession business comprises circa 10 per cent of MyEG's financial year 2023 (FY23) revenue, and its ancillary business could also be impacted.

"The revenues could fall off only by the second half of 2025 (2H25), following the completion and migration of the immigration system to NIISe.

"MyEG should still however be able to continue its cross-selling business, although it remains uncertain how effective it can market the insurance products through the new platform later.

"We estimate the revenue shortfall to be 6.0-7.0 per cent by the financial year 2023 (FY25), and 8-10 per cent by FY26," it said.

Besides MyEG and Iris, listed companies involved in e-government and IT services include Dagang NeXchange Bhd (DNeX), Datasonic Group Bhd and AwanBiru Technology Bhd (formerly Prestariang Bhd).

DNeX told the NST it was not providing any services to the Immigration Department and hence would not be affected by the department's new direction.

According to DNeX, its businesses relied mainly on its technology and energy business segments, which accounted for more than 80 per cent of revenue.

It also said key services from its IT business segment for the government included serving as the operator of Malaysia's National Single Window (NSW) for Trade Facilitation via subsidiary Dagang Net Technologies Sdn Bhd.

"We also provide the maintenance, support services and application improvement of the integrated government financial and management system, and application and software maintenance of Malaysia Hasil Integrated Taxation Systems provided by Innovation Associates Consulting Sdn Bhd," it added.

As at 3.20pm today, MyEG rebounded 1.5 sen or 2.14 per cent to 71.5 sen, DNeX shed 0.5 sen or 0.8 per cent at 64.5 sen, Datasonic increased 0.5 sen or 1.09 per cent to 46.5 sen, AwanBiru eased one sen or 2.5 per cent to 39 sen and Iris one sen lower or 6.1 per cent to 15.5 sen.

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Comments

yokelee tan طن يوكي لي
Like · Reply
at present, the passport situations is bad. no
passport for more than one month. why ask people do online application?

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