My E.G. Services Bhd

Electronic government services provider My E.G. Services Bhd’s (MyEG) shares slumped 7.6 on news that three other companies have been given the green light by the Government to provide electronic transaction services to the Road Transport Department (JPJ).

Electronic transactions for the JPJ are currently (Nov2008) handled by MyEG.
MyEG’s earnings going forward would definitely be affected as the bulk of its revenue was derived from providing electronic transaction services to the Government, especially the Government Enterprise Solution (GES) and Government to Citizen (G2C) services. GES and G2C services contributed over 90% to MyEG’s revenue.

MyEg was the exclusive service provider then but now (Nov2008) it has to share its core business with three other competitors.

The Government’s move to allow more players to service E-businesses will break the monopoly and hopefully promote healthy competition among players to drive down cost and improve efficiency of the services.

However, the move to break the monopoly would not augur well for MyEG as its non-core businesses were still at a growing stage and were yet to contribute significantly to the group revenue

In October 2007, MyEG acquired Fidelity Radiance Sdn Bhd as part of plans to diversify and move away from government projects.

Financial Results …

For financial year 2008, MyEG posted a net profit of RM14.78mil on revenue of RM49.27mil.

Its net profit (MYEG) jumped 51.2% to RM4.16 million in its first quarter (1Q) ended Sept 30, 2008 from RM2.75 million a year earlier on the back of a growing acceptance of its online road tax renewal service launched last April.

The e-government services concessionaire’s revenue rose 35.7% year-on-year to RM12.24 million from RM9.02 million previously. Basic earnings per share fell to 1.6 sen from 2.2 sen.

It declared an interim tax exempt dividend of 0.455 sen per share payable on Feb 23, 2009, upon completion of a bonus issue of 327.85 million new MYEG shares to be credited as fully paid-up on the basis of six shares for every five shares held.
The group also saw growing revenue contributions from the Highway Code theory test-taking in the first quarter.

The healthy growth achieved in the first quarter — typically a cyclically weak quarter for the group — is indeed an encouraging trend. This shows the increased awareness and adoption of its services among the general public.