Is My E.G. Services Berhad Worth Investing In?

My E.G. Services Berhad (KLSE: MYEG) (“MYEG”) is a leading e-government services provider in Malaysia. The group builds, operates and owns the electronic channel to deliver services from various government agencies to Malaysian citizens and businesses. The main service suppliers that currently employ MYEG’s e-government services are the Road Transport Department Malaysia (JPJ), Royal Malaysian Police, Immigration Department of Malaysia, Kuala Lumpur City Hall (DBKL), Malaysian Department of Insolvency and others. 

While the on-going Covid-19 pandemic has brought forth dramatic changes to the world and the global economy, MYEG has adapted well to these changes and the group has been able to capture some new business opportunities thanks to its proactive management and good working relationships with government agencies. We summarise below some of its key accomplishments and new business launches in 2020.

  1. Secured 3-year extensions for JPJ and immigration concessions 

On 1 July 2020, MYEG received a notification letter from the Ministry of Home Affairs to extend the provision of immigration related services (i.e. online renewal of temporary employment pass for foreign workers) for a period of 3 years from 23 May 2020 to 22 May 2023.  The estimated value of the immigration related services is approximately RM208 million.

Separately, MYEG had on 4 December 2020 received a letter from the Ministry of Transport to extend its e-government services for a period of 3 years from 23 May 2020 to 22 May 2023. The concession agreement is for the provision of electronic delivery of vehicle registration, driver and vehicle licensing and payment of summon services. 

  1. Online renewal of motorcycle road tax and driving license

MYEG has on 1 October 2020 announced the expansion of its JPJ related services with the introduction of the online renewal of motorcycle road tax and competent driving license. Additionally, users will also be able to access an array of related value-added offerings such as online motorcycle insurance renewal. 

(Source: Company’s website)

  1. One-stop portal for employers for workforce screening

MYEG had in May 2020 launched a one-stop portal and digital certificate for employers in Malaysia to manage the screening of their workforce for Covid-19 virus related to the Prihatin Screening Programme. In addition, MYEG has partnered with a panel of Social Security Organisation (SOCSO) registered clinics where MYEG will arrange for screening to be conducted on-site at employers’ premises. 

(Source: Company’s website)

  1. MYEG’s Travellers Health Pass System

MYEG had on 3 November 2020 launched MYSafeTravel by MYEG, a digital health pass system for travellers aimed at making entry into Malaysia faster, simpler and safer amid the on-going Covid-19 pandemic. Developed and operated by MYEG for the Ministry of Health, MySafeTravel serves as an online channel for inbound travellers to register and pay for mandatory Covid-19 swab tests and to choose their preferred location for quarantine stays prior to arrival, thus making the travel to Malaysia more efficient and convenient. 

(Source: Company’s website)

  1. Covid-19 testing in Philippines

In November 2020, MYEG Philippines (MYEG’s 40% owned joint-venture, I-Pay MYEG Philippines Inc.) entered into a partnership with Family Vaccine Speciality Clinics, Inc. to develop a mobile app for the booking and payment of Covid-19 tests, along with the issuance of a digital QR code as proof of testing in an initiative called Health Direct Now. Family Vaccine Speciality Clinics operates the largest chain of vaccination clinics in the Philippines with 41 centres, to offer accessible testing for Covid-19. 

With the partnership, MYEG Philippines will develop the mobile app and be the exclusive payment gateway partners. MYEG Philippines and Family Vaccine Speciality Clinics will jointly share the profits of the Covid-19 testing booths on a 50/50 basis. 

  1. At home saliva-based Covid-19 testing in Philippines

MYEG had on 4 February 2021 announced the introduction of an at-home, saliva-based Covid-19 testing service for the Philippines. As the exclusive distributor of the kit, MYEG will be making the service available through MYEG Philippines in collaboration with IP Biotech Inc., a licensed importer of vaccines, and medical devices in the Philippines, and Family Vaccine and Speciality Clinics. This saliva-based kit, which has received the approval of the Food and Drug Administration of the Philippines, can detect the new strains of Covid-19 virus that has been reported in the UK, South Africa and Brazil.   

  1. Covid-19 vaccine in Malaysia

MYEG had on 5 December 202 entered into a Memorandum of Understanding (MOU) with Anhui Zhifei Longcom Biopharmaceutical Co., Ltd (Zhifei) to conduct phase-3 clinical trials and subsequent commercialization of Zhifei’s Covid-19 vaccine in Malaysia. Under the MOU, MYEG will be responsible for co-ordinating with Malaysian clinical institutions, the Ministry of Health and other regulatory authorities to conduct and complete phase-3 clinical trials of Zhifei’s Covid-19 vaccine in Malaysia. In return, Zhifei has agreed to grant MYEG exclusive distribution agency rights of the Covid-19 vaccine and corresponding commercial rights in Malaysia. 

  1. Company information search service in Singapore

MYEG had on 9 November 2020 launched its online service to search for corporate information and business profiles of Singapore companies. The new service is a collaboration between MYEG and CRIF BizInsights Pte Ltd, a Singapore-based company and a licensee to the Accounting and Corporate Regulatory Authority database to supply information report services.

  1. Fresh groceries business 

When the Movement Control Order (MCO) was imposed in March 2020, MYEG launched its e-commerce platform NAKBELI by MYEG to provide consumers a more convenient solution to shop for a wide range of groceries, fresh produce and everyday essentials. Subsequently in August 2020, MYEG launched the NAK BELI Flexi Value Plan, a monthly subscription scheme that allows customers to shop for quality vegetables, fruits, meat, poultry and seafood at discount prices. 

(Source: Company’s website)

  1. Financial and digital banking services

MYEG has on 1 June 2020 proposed to diversify the group’s existing business to include the provision of financial services such as auto financing, personal and business financing and digital banking services. Since these business services are still at early stages and revenues are not significant, it would be premature for investors to get overly excited of its prospects. 

In summary, securing the extensions for the JPJ and immigration concessions are, in our view, MYEG’s most notable accomplishments in 2020. We also see high revenue potential from the workforce screening, Traveller Health Pass System and Zhifei Covid-19 vaccine. On the other hand, we do not expect other initiatives such as fresh groceries and financial and digital banking services to gain traction that quickly, but could be long-term growth opportunities for the group. MYEG investors can be optimistic of the group’s future. 

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