MyEG edging forward with CSTM, road safety project

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KUCHING: My E.G. Services Bhd (MyEG) is moving forward with the upcoming Customs Service Tax Monitoring (CSTM) and the road safety project which starts diagnostic in the first quarter of the current year 2015 (1QCY15).

According to the research arm of Kenanga Investment Bank Bhd (Kenanga Research), MyEG is looking to see robust growth in its top line (annual contribution of circa RM50 million based on Phase 1 and Phase 2a) from the first half of CY15 (1HCY15) or 2H of financial year 2015 (2HFY15) onwards.

Yesterday, the group announced the acceptance of the award of the Customs’ Online Tax Reporting (Electronic Monitoring System) project, commecing Dec 1 this year with a tenure of six years.

“The estimated total value of the EMS project is approximately RM180 million.

“With the acceptance of this award, the government and MyEG agree that the Letter of Award Dated February 13, 2014 in relation to the above be and is hereby cancelled.

“It is expected that the EMS project would contribute positively to the earnings of the company for the financial year ending June 30, 2015 onwards,” it said in its statement, adding that the source of funding is expected to be obtained from internally generated funds and bank borrowings.

As for the Road Safety Project, Kenanga Research gathered that the government had recently made it mandatory for commercial buses to install road safety diagnostic kit within a year.

It noted that MyEG has taken part in the programme with its road safety project already
undergoing its pilot testing phase (of 12 buses) with the Land Public Transport Commission (SPAD).

“Note that the diagnostic kit will be used to diagnose real time conditions of the driver in monitoring their driving pattern and condition of the vehicles,” it said.

Kenanga Research added that the group is targeting to roll out its services in 1QCY15 with phase 1 targeting circa 30,000 local express buses and phase 2 targeting circa 100,000 lorries and goods vehicle.

While there will be no charges on the bus companies for the installation of the diagnostic kit (as MyEG will bear the cost of RM5,000 per kit, totalling to RM150 million), the research arm said that these bus companies will be mandated to purchase the insurance coverage from MyEG in return.

“We understand MyEG would benefit from circa 10 per cent per insurance fee for each express bus where the group has targeted to capture circa 20 per cent of the RM1.2 billion annual commercial bus industry insurance premiums.

“Note that we have yet to assume any potential earnings from the Road Safety Project, to be on the conservative side,” it said.

In addition to the above, MyEG’s immigration services are expected to see expansion with the group looking to include application for new foreign workers into its immigration services to ease the process of companies bringing in new workers.

As of this juncture, Kenanga Research noted that the company’s foreign workers permit renewal services has a market share of circa five per cent of the 2.5 million legal foreign workers in the country.

“With the new service in the pipeline, we are expecting the group’s market share to grow to circa 15 per cent (circa 38,000 foreign workers) in FY16.

“We understand that the average revenue per foreign worker permits renewal and application is circa RM 100, which includes commissions from insurance premiums required for the foreign workers,” the research arm said.