KUALA LUMPUR (Feb 7): MyEG Services Bhd, which succumbed to heavy selldown pulling its share price to a 26-month low, bought back two million shares on the open market at RM1.44 million or 71.5 sen each.
Meanwhile, its major shareholder and managing director Wong Thean Soon also acquired five million shares on Tuesday (Feb 7), at 73.8 sen each or RM3.69 million.
Subsequent to the latest acquisition, Wong has a 12.4% direct interest and a 17.27% indirect interest in MyEG.
The company’s share price fell as much as 30 sen or 31.5% to an intraday low of 65.5 sen on Tuesday, after news reports that immigration services provided by MyEG will be reverted back to the government by 2025. It was the most active stock on Bursa Malaysia with RM1.02 billion shares changing hands.
It was reported that Putrajaya intends to converge all immigration services and processes — including passport renewals, visa applications, applications and renewals of permits for foreign workers — into its National Integrated Immigration System (NIISe).
In response, MyEG told Bursa Malaysia that it has not held any meeting with the Ministry of Home Affairs or the Immigration Department of Malaysia on converging all immigration transactions under the government’s NIISe.
At market close, MyEG pared some losses to settle 25.5 sen or 26.7% lower at 70 sen, lowest since November 2020. This values the group at RM5.23 billion.
In a report on Tuesday, MIDF Research said the latest development posts an “elevated policy risk” to MyEG, and would likely deter investors from the stock, considering the significant contribution of immigration-related services to its revenue.
“Regarding the recent announcement that all immigration services and procedures will be taken back by the immigration department and managed internally by 2025, we opine that this change will negatively impact third-party entities like MyEG who currently handle these services in a long run,” said the research firm, which reduced its target price to RM1.00 from RM1.23 but maintained a “buy” recommendation.
MIDF noted that the immigration services generate around 40% of MyEG’s income, including the renewal of foreign workers’ work permits which accounts for approximately 10% of the overall revenue, while 30% is derived from additional services such as insurance renewal and job matching services for foreign workers.
“If the immigration services are transferred back to the immigration department as planned, it could potentially leave a negative impact on MyEG’s revenue in the long term, (and) as such, (would) lower potential net income by almost 20% after 2025.
“In contrast, if the immigration [is] unable to deploy the NIISe by 2025, this will provide a better outlook for MyEG, as it will prolong the schedule for foreign workers’ work permit renewal services to return to the immigration department,” said MIDF.