PETALING JAYA: Iris Corporation Bhd may emerge as a strong contender for a possible MyKad contract tender following the company’s realignment of business focus on Trusted ID.

Kenanga Research said that Iris’ technical knowhow and capabilities in digital ID render it a strong candidate for the contract.

The research house believes the tender for the supply of MyKads could open up soon, as the existing RM260mil contract carried out by a competitor company is expiring end-2019.

“Although MyKads have not been fully delivered under the existing contract, we understand that there are no ramifications upon the expiry.

It estimated that the contract could generate a profit after tax of RM15mil (30% of the FY20 core net profit) annually from FY21 onwards for Iris, based on back-of-envelope calculation and assuming 15% lower contract value.

Kenanga Research rated Iris as “trading buy” with a fair value of RM0.20, based on the FY20E price earnings ratio (PER) of 12 times.

It added that the company’s earnings are expected to bounce back with a vengeance in FY20 (+98%).

“The stock only trades at FY20E PER of 8.5 times, which limits its share price downside, while providing investors with opportunities to buy into its potential to win the MyKad contract,” Kenanga Research said.

Iris has been divesting non-core assets to realign its business focus on Trusted ID, which involved kitchen-sinking impairments and write-offs of RM316mil over FY17 and FY18.

The almost concluded exercise has helped stem the bleeding from non-core assets and brought the group back into profitability in the past three quarters.

The research house is of the opinion that the few remaining non-core assets which are still dragging Iris’ profitability could be disposed of this year.

“We believe that the Rimbunan Kaseh project could be handed over back to the state government by the end of the first half of 2019, while the intended disposal of its mining business in New Zealand could potentially be concluded this year as well, pending approval from the local authority,” it said.

The research house added that the bulk of Trusted ID revenue comes from the African continent (70% to 80%) while Malaysia contributes less than 10%.

Iris’ contract to supply 2.5 million units of 32-page Nigerian electronic passports with a contract value of RM170mil is expiring in August while another contract from the Senegalese government to supply 10 million multi-application ID biometric cards with a contract value of RM346mil is being fulfilled at more than 80%, well ahead of its expiry in mid-2021.

Anyone knows who are Tiong Nam's customers for their logistics and warehousing division?

Anyone knows who are Tiong Nam's customers for their logistics and warehousing division?

Anyone knows who are Tiong Nam's customers for their logistics and warehousing division?

Anyone knows who are Tiong Nam's customers for their logistics and warehousing division?

Anyone knows who are Tiong Nam's customers for their logistics and warehousing division?

Anyone knows who are Tiong Nam's customers for their logistics and warehousing division?

Can anyone help? Why did EPS and NTA decrease even thought revenue and profits?

Diversification for MYEG is not necessarily a bad thing. MYEG has a pretty good track record with diversification/expansion - JPJ related services, foreign workers' permit and recently accommodation for foreign workers.

Annual Report 2017
"The year under review saw increased transaction volume for foreign workers permit renewal, foreign workers rehiring programme and foreign workers insurance scheme. Concurrently, the Group also registered increased revenue contribution from the Jabatan Pengangkutan Jalan ("JPJ") related services that include renewal of driver's license, renewal of auto insurance and road tax, and vehicle ownership transer. MYEG also saw an uptick in revenue contribution from its motor vehicle trading related services"

From the annual report we can see growth hasn't slowed down but lets not rely on the annual report since the latest QR showed signs of decline in growth. Even assuming peaked out growth from its JPJ related services, here's why I am of an opinion that there is still upside for MYEG:-

1. The potential of GST
2. Growth in foreign workers' accommodation business

The GST potential for MYEG is massive but I rather focus on point no.2.

MYEG is ramping up its foreign worker accommodation business. On 16 August 2016, MYEG Lodging rented three hostels (2 FULLY OCCUPIED as of Aug 2017) from the Melaka State Development Corp (PKNM) for foreign workers. One year later, on 20 June 2017, MYEG Lodging leased land in Johor Bahru for foreign workers accommodation as well. Now why do you think MYEG is so keen on ramping up its foreign workers accommodations business?

Perhaps it is because "the government is amending a law to make it mandatory for employers to provide an integrated and centralised labour quarters for their foreign workers by 2018". UOB Kay Hian also noted that MyEG’s foreign worker accommodation will eventually form the largest revenue segment in FY2019?

What is the potential of this? - 1.5 million foreign workers, RM2 billion in revenue annually and this is even before factoring in the GST potential. This is in no way a buy call for MYEG. With that said, for me personally, MYEG is where I will put my money.


Here are the links for your reference:-
http://www.theedgemarkets.com/article/myeg-post-record-profit-fy17-says-uob-kay-hian
https://www.nst.com.my/news/nation/2017/05/240495/human-resources-ministry-aims-make-housing-foreign-workers-mandatory
http://www.thesundaily.my/news/2017/07/13/myegs-myhom-generate-revenue-end-2018

@leoting @edward123 what are your opinions on the price war?

Thanks a lot edward

@edward123 thanks for the explanation bro. Would you happen to remember the range of steel prices from April - July?

@edward123 @leoting How do you think FBMKLCI breaching support will affect SSTEEL and the steel market?

@edward123 what are the updates?

Why is MYEG dropping so badly?

@edward by "wait patiently" do you mean good news or bad news awaiting in the QR?

@leoting around when are you anticipating this dividends to be announced?

This price movement will only be reflected in Q3's results. Q2 would still be weak I assume

@edward @leoting Thank you for the explanation. It clarified my doubts

What is your TP contrarian?

@leoting would you be so kind as to explain how this R6,8,12,16,20&25=Rm2590 (No Stock) would affect SSTEEL's revenue and market share? I understand SSTEEL is a good company but isn't it missing out on the sales of R6,8,12,16,20&25 now? Even if it had inventory of Rs early on and has "sold out" due to demand, wouldn't this lead to customers shifting purchase to other steel counters and deplete its market share & revenue(present & future)?

@perseus thoughts?

UMA is out

NETX-WB eaten up by bots 50k per transaction now. 2nd wave perhaps?