FIGURE 1: MY E.G. SERVICES
BERHAD LAST 5 YEARS SHARE PRICE TREND
**analysis
based on 2019 annual report.
1.
GENERAL
INTRO: MYEG’s core business is in providing digital/commercial services and
e-government services.
2.
NOTABLE
POINTS:
a.
MYEG has operations in Malaysia, Philippines,
Bangladesh and Indonesia
b. In MYEG's business model, it acts as an enabling
“bridge” between consumers, businesses and governments. It aims to delivers
safe, secure and hassle-free online services that provide accessibility,
convenience and affordability to consumers and businesses.
c. In FP2019, MYEG recorded a significant increase
in revenue and earnings. Revenue and earnings were bolstered by contributions
from the Group’s concession-related services such as Immigration Department and
Road Transport Department (“JPJ”) services and their related ancillary
services. Another major contributor of its earning is from its commercial
offerings, including motor vehicle trading related services, financing
services, foreign worker recruitment and placement related services, and the
deployment of payment solutions as well as hardware and merchant acquiring
services.
d. Consistent with previous financial periods,
digital and commercial services accounted for around 80% of the Group’s revenue
while e-government services accounted for around 20% of the Group’s revenue.
3.
IS
THIS COUNTER A STRONG GROWTH STOCK?
a. REVENUE RANGE (RM million): 593.5 million as
reported in 2019 annual report, this is a medium revenue company.
b. SHARE PRICE: from 2016-2021, share price overall
remained steady, ranging from ~ RM1.00 to RM2.50. Since September 2020, share
price has been on upward trend from ~RM1.70 to the current level of around
RM2.20.
c. EARNING PER SHARE (EPS): earning per share in
last 5 years was overall improving, which increased steadily from 1.9 to 8.6 sen.
d. PRICE TO EARNINGS (P/E) RATIO: current P/E ratio
is at 30.28, which shows that MYEG’s share price is significantly overvalued
compared to its earnings.
e.
FUTURE POTENTIAL/PROSPECTS: share price expect
to be stable in the next few years.
f. CAPITAL EXPENDITURE (CAPEX): spending on
purchase of new fixed assets and other investments amount to about RM 69.87
million, which is around 6% of total assets.
4.
IS
THIS A STRONG DIVIDEND STOCK?
a. DIVIDEND YIELD: in 2019 financial year, MYEG declared
a dividend payout of 2.5 sen per share to its shareholders, this amounts to a
dividend yield of 1.19%.
b.
DIVIDEND PAYOUT RATIO: the dividend payout ratio
amounts to around 29%.
c. CONSISTENCY: This counter’s dividend payout has
been very consistent (dividend paid to shareholders in 5 out of 5 years), the dividend
paid to shareholders in the last five years ranged from 1.7 to 2.5 sen per
share.
5.
IS
THE MANAGEMENT PERFORMANCE GOOD?
a. RETURN ON EQUITY (ROE): in 2019 financial year, MYEG
reported an excellent return of shareholders’ equity, at 28.8%. In the last 5
years, its ROE was also consistently high, ranging from 22.6% to 47.5%.
b. COST-TO-INCOME RATIO: the cost-to-income ratio
is 93.39%, which is quite low. Unlike manufacturing sectors, IT services
companies have a much reduced cost in terms of labour cost and raw material
costs. Most of the business activities were performed online and highly
automated. Hence, IT industries generally have a much lower cost-to-income
ratio compared to manufacturing sectors.
c. DEBT-TO-EQUITY (GEARING) RATIO: Its gearing
ratio is at 45%, whereby its debt level is less than its equity, resulting in a
healthy balance sheet.
d.
CASH FLOW: cash flow is positive, at around RM 63.8
million, equivalent to RM 0.02 per share.
6.
OTHER
INDICATORS:
a. SUPPORT BY INSTITUTIONAL INVESTORS: this counter
is well supported by institutional investors, there are 14 institutional
investors at top 30 major shareholders list, including LEMBAGA TABUNG HAJI
(1.43%), EPF (5.59%), KUMPULAN WANG PERSARAAN (5.02%), as well as investment
funds and insurance funds. Its major shareholders are Asia Internet Holdings
Sdn Bhd (20.68%) and Wong Thean Soon (10.51%).
Disclaimer:
The content of the blog posts are for sharing purpose only. Readers are
encouraged to carry out further research and analysis as well as follow up
latest update information before making any investment decisions.
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