KUALA LUMPUR: Shares of My E.G. Services Bhd (MyEG) have been hammered this week, slicing RM2.31 billion off the company's market value to RM4.53 billion on Friday from RM6.84 billion a week earlier.
The e-government services provider was hit by a double whammy that sent its share price crashing to 61 sen from 96 sen over a span of five trading days.
The double whammy rears its head in the form of a report by the New Straits Times (NST) on Monday that the Immigration Department might directly handle all immigration affairs from 2025, and an announcement that road tax stickers for private vehicles were no longer mandatory.
Immigration Department director-general Datuk Seri Khairul Dzaimee Daud told the NST that all immigration-related affairs, including those now being managed by outside parties, would be managed by the department directly once the new National Integrated Immigration System (NIISe) went live by 2025.
Besides passport renewals and visa applications, these would also include applications and renewals of foreign workers' permits and maid permits.
This suggested that MyEG - which also provides road tax renewal services including the road tax stickers - would lose its revenues from providing immigration-related services.
A day after the NST report, MyEG crashed to a two-year low of 70 sen on Tuesday when trading on Bursa Malaysia resumed after an extended holiday in lieu of Thaipusam.
The stock, however, recovered to 71.5 sen on Wednesday and Thursday following a share buyback by MyEG, as well founder and managing director Wong Thean Soon of two million and five million shares respectively.
MyEG shares closed 1.5 sen or 2.14 per cent higher at 71.5 sen on Wednesday.
MyEG also received a vote of confidence from its substantial shareholder Employees Provident Fund after the pension fund further raised its direct stake to 6.9 per cent, or 512.97 million shares, on Wednesday.
MyEG bought more shares on Thursday, spending RM1.45 million to buy back an additional two million shares at 72 sen each.
But the company got hit by another bombshell when Transport Minister Anthony Loke announced on Friday morning that owners of private vehicles would no longer be required to display the vehicle licence, or also known as road tax stickers, on windscreens.
The counter dropped 14.69 per cent or 10.5 sen to 61 sen, giving it a market value of RM4.53 billion.
It was the most actively traded stock on Friday with a volume of 787.22 million shares.
On Friday, MyEG bought back an additional two million shares of the company at 61 sen each for a total of RM1.22 million. That was the third block of shares it bought this week.
In total, it spent RM4.1 million for six million shares in its share buyback.
The company's cumulative net outstanding treasury shares stands at 45.6 million, its bourse filing showed.
After the share sell-off on Tuesday, MyEG clarified that it had not held any meeting with Putrajaya on converging all immigration transactions under the government's NIISe.
MyEG founder Wong also told analysts that it expected its concession to handle foreign workers and maids applications and renewals to be maintained at least until 2025.
"We think the market overreacted to the NIISe news (share price down 27 per cent on Tuesday)," CGS-CIMB Research analyst Mohd Shanaz Noor Azam wrote after hosting a conference call with Wong on Feb 7.
He believes MyEG stands to receive another extension to its immigration-related services concession due in May 2023, given that NIISe which, is developed by Iris Corp Bhd, would not be ready anytime soon.
"We believe this is the optimal outcome in the near-term given that we do not expect the government to immediately replace the incumbent service providers and risk a public backlash if the new system fails to deliver," Mohd Shanaz said.
MARC Ratings Bhd on Friday said MyEG's concession (immigration-related services and processes) revenue remained modest, standing at about eight per cent of total group revenue as at end-2021.
"This is expected to decline going forward and therefore will not materially affect the group if these concession agreements were to cease."
The rating agency also highlighted that MyEG's ancillary businesses, particularly those related to immigration services, accounted for about 45 per cent of total group revenue.
The ancillary services were not likely to be impacted given MyEG's long operating track record as a service provider with over 900 kiosks, supported by an established digital infrastructure, MARC said.
"The rating agency understands that MyEG's three-year concession agreement with Immigration Department which is expiring in May 2023 will be renewed for another three-year period. Nonetheless, MyEG remains exposed to renewal and termination risks as well as regulatory changes," it added.
For the first nine months ended Sept 30 2022, MyEG's net profit jumped to RM323.97 million from RM235.43 million in the previous corresponding period, boosted by the resumption of full operations of its e-service centres nationwide.
Its revenue slightly dropped 0.8 per cent to RM486.18 million, from RM489.99 million in the corresponding period in 2021.