My EG Services Bhd (MYEG.KL)

My E.G. Services Berhad is engaged in the businesses of development and implementation of the electronic government services project and the provision of other related services for the electronic government services project, as well as investment holding. The Company's businesses are categorized into two strategic business divisions: Government to Citizen (G2C) and Government/Enterprise Solution (GES). G2C services refers to services such as driving theory test bookings, issuance and renewal of licenses, electronic bill payment and payment, as well as online information services such as traffic summons checking and electronic bankruptcy or liquidation status searches. GES are non-Internet based services, such as software and enterprise solutions, system development and maintenance, as well as services rendered at the e-Services Centers. Its other services include renewal of renewal of foreign workers permit, Zakat payments, and Kuala Lumpur City Hall assessment and summons payment.

There are two notable directors in MYEG who are influential to the society. Tan Sri Dato’ Dr Muhammad Rais Bin Abdul Karim, who has served in the Government of Malaysia for 38 years, held various distinguish positions, and Dato’s Shamus Anuar Bin Haji Nasrah, who is currently a Member of Parliament for the constituency of Lenggong Perak.

largest manufacturer of frozen Asian food delicacies.

Based on Financial Year (FY) 2017 full year results, MYEG achieved RM 371 million turnover, which is considered to be a mid to large enterprise based on turnover value. Other aspects of the company’s latest financial results are illustrated in the table below.

MYEG’s revenue has been on an exponential upward trend from RM 66 million in FY2012 to RM 371 million in FY2017 which translates to a 5.6 time jump in a short span of 5 years. In terms of net earnings, MYEG has been experiencing a similar exponential trend from RM 27 million in FY2012 to RM 200 million in FY 2017, which equals to a 7.4 times increase in just 5 years.

Net profit margin wise, MYEG clocks an extremely high 54% margin, which is very rare to have such a high margin business model. Return of equity (ROE) wise MYEG scores a extra ordinary value of 35.26%.

On company’s debt, MYEG has a decent debt to equity ratio at 0.22, and the company’s both current ratio and cash ratio are of good values as well at 2.33 and 0.81 respectively.

However, MYEG pays a low dividend yield of 0.98% in FY2017 with a low payout ratio of 0.28.

In conclusion, MYEG is a very rare company with such high profit margin and exponential profit growth over the years, probably due to its linkage to the government that ensures ever growing book orders and service engagements.

Moving forward, MYEG targets to play a vital role in digitalizing more public service by working closely with the Government to enhance public sector delivery, adding value to lives of Malaysians through implementing new services and projects. Moreover, the company has started a Joint Venture company with I-Pay Commerce Ventures Inc to provide similar eGovernment related service in the Philippines, which marks the start of the group’s oversea expansion that strengthens the group’s growth in future years.

Next quarterly results announcement is expected to be in the month of May 2018.

News on My E.G. Services Berhad

According to The Edge News, MyEG e-services is seen to benefit from growing broadband penetration. We believe MyEG’s dominance in e-government services has been strengthened by high speed Internet following the High Speed Broadband rollout in 2010 and 4G and LTE in 2013. Under the 10th and 11th Malaysia Plan, the government continues to push for increased high-speed Internet coverage under the High Speed Broadband 2, Sub Urban Broadband and Broadband for General Population initiatives which we believe would benefit MyEG.

Moreover, report from The Star stated that besides political connection, this company that started out as a government concession is now offering every service under the sun.

In January alone, it launched two new services. On Jan 3, it launched a new job-matching and placement service to match Malaysian employers with foreign workers, via its subsidiary MY EG Jobs Sdn Bhd. On Jan 10, MyEG announced that Bank Negara has allowed its unit to issue electronic money via iPayEasy e-wallet.

Presently, commercial services, not government concessions, contribute 70% to its bottom line.

My EG Services Bhd (MyEG) has signed an agreement to invest 15 million yuan or RM9.24 million in a Chinese mobile augmented reality and virtual reality (AR/VR) developer. The e-government services provider said its wholly-owned venture investment arm, My EG Capital Sdn Bhd, signed the deal today to acquire a 3.125% stake in Ximmerse. The investment is part of the group's expansion strategy to tap into fast evolving technologies which bring commercial value, the group said in a statement. They believe that these technologies will integrate into every part of our lifestyle andwill profoundly change our living experience.

iVolume Spread Analysis Weekly Chart & Comment – My E.G. Services Berhad

Based on 12-month weekly iVSAChart, MyEG have continue the Mark-Up stage after 5 months of re-accumulation from May to December 2017. During the re-accumulation stage, iVSAChart spotted hidden potential buying from Smart Money and subsequently price broke to new high on January 2018.

From the chart above, we also notice the effort from Smart Money with the latest Sign of Strength in earlier of February 2018. Smart Money have successfully flushed out weak-holder at the latest support level. Thus, we will continue to hold MyEG and run the profits by following the footprint of Smart Money.

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