MYEG: Earnings Continues To Rise

Results Update

In QE31/12/2016, MYEG's net profit rose 18% q-o-q or 57% y-o-y to RM48 million while revenue rose 13% q-o-q or 40% y-o-y to RM89 million. The increase in Revenue and PAT is primarily attributable to an increase in revenue contribution from foreign worker rehiring program services as well as from motor vehicle trading related services. However, the increase in Revenue was offset by higher marketing expenses and personnel related expenses. [Note: Myeg's result for QE31/12/2016 was released Feb 27, 2017.]


Table: MYEG's last 8 quarters' P&L


Graph: MYEG's last 17 quarters' P&L

"New" Development

Last Friday, MyEG confirmed that the value of the five-year concession awarded by the Government to provide online renewal of temporary employment passes for foreign workers (from May 23, 2015 to May 22, 2020) is RM553.85mil (here). This concession is expected to contribute positively to the earnings and net assets per share for the financial years ending June 30, 2017 onwards until the expiry of the project. This concession was already made public in January (here).
 

Valuation

MYEG (closed at RM1.77 last Friday) is now trading at a trailing PER of 37x (based on last 4 quarters' EPS of 4.8 sen). Based on average earning CAGR of 70% over the past 2 years, PEG ratio is comfortably below 1- which means that MYEG valuation is deemed "attractive" for a growth stock.

Technical Outlook

MYEG has been in a steady uptrend after it broke above the resistance from the horizontal line at RM0.15 in 2013.


Chart 1: MYEG's monthly chart as at Mar 3, 2017 (Source: ShareInvestor)

Last week, MYEG broke above the line connecting the peaks for the past 15 months (AB) at RM1.73-1.75. With this upside breakout, MYEG may continue its prior uptrend.


Chart 2: MYEG's weekly chart as at Mar 3, 2017 (Source: ShareInvestor)
Conclusion

Based on good financial performance, attractive valuation (supported by rapid growth) and positive technical outlook, MYEG could be a good stock for long-term investment. Good entry level is at RM1.75.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.