MYEG: Testing Strong Support

MYEG was fined RM2.272 million in June by the Malaysian Competition Commission for abusing its dominant position in the online foreign workers permit ('PLKS') renewals processing when its its wholly-owned subsidiary, My E.G. Commerce Sdn Bhd (MyEG Commerce) participates as an insurance agent in the PLKS applications. The participation of MyEG Commerce has caused competitors offering insurance coverage to be at a disadvantage. MYEG has been given 60 days to rectify the situation, failing which a higher daily fine will be levied against it.

From the chart below, we can see that MYEG peaked in early January at about RM2.30. After that, it has dropping in a downward channel, R-R, R1-R1). Today the share price touched the lower line, R1-R1 at RM1.72. This is also the accelerated uptrend line S1-S1 support as well as the horizontal line. Thus I believe the stock is likely to enjoy a technical rebound from here. We will have to wait for a while to see whether the low today the end of the current downtrend or merely a temporary bottom.

From the recent post, we can compute MYEG's trailing PER at 37x (based on current price of RM1.78 & EPS of 4.8 sen). MYEG's earning has a CAGR of 60%; giving it a PEG ratio of 0.6x. Thus, MYEG is deemed attractive as a growth stock as its PEG ratio is less than 1x.

Based on this valuation, MYEG could be a decent stock to consider for your investment at the current price of below RM1.80. You are advised to exercise careful discretion if you choose to trade this stock.


Chart: MYEG's weekly chart as at July 11, 2016_3.15pm (Source: Kenanga/Chartnexus)

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, MYEG.