KUALA LUMPUR, Feb 8 — Research firm CGS-CIMB Securities Sdn Bhd believes that the market had overreacted to the National Integrated Immigration System (NIISe) project news, which led to MY EG Services Bhd’s share price tumbling by 27 per cent yesterday.

It was reported that all immigration related services, including those managed by external parties, could revert to the Immigration Department with the potential rollout of the NIISe project by 2025.

The news caused MyEG’s share price to fall by 25.5 sen to 70 sen with trading volume exceeding 1.01 billion shares at the closing bell yesterday.

On Tuesday, Bursa Malaysia suspended the shortselling of MYEG shares for the rest of the day under proprietary day trading (PDT) and intraday short selling (IDSS) after its stock dropped more than 15 sen, or 15 per cent, from the reference price.

Trading of the e-government services provider’s shares and structured warrants had also been halted from 2.44pm to 3.44pm yesterday.

"We believe MyEG stands to receive an extension to its immigration-related services concession, which is due in May 2023, given that NIISe 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,” it said in a research note today.

It is etimated that the immigration services concession contributes RM70 million in annual revenue to MyEG, based on the last extension worth RM208 million for three years signed in 2020.

According to CGS-CIMB, MyEG said it has not held any meeting with either the Home Ministry or Immigration Department on the intention to converge immigration transactions under the NIISe.

The company added that it expects to maintain its foreign workers and maid permit renewals until at least 2025.

On the other hand, the research firm said MYEG offers a 17 per cent upside from current levels, even in a worst-case scenario without earnings accretive potential from blockchain development.

"We have also not factored in new earnings potential from its Zetrix blockchain despite the group expecting to see material earnings contributions from its Web3 development in financial year 2023 (FY23F).

"We see potential for new income streams from the Zetrix blockchain joint venture, higher take-up in its job-matching service, expansion of its government digital service offerings and new concession extension as potential rerating catalysts for the stock,” it said.

Meanwhile, delays in recovery of its job-matching service, lack of new egovernment digital service introduction and removal of immigration and transport related concession services are downside risks to CGS-CIMB’s ‘Add’ call on MyEG.

As at 11.38 am, MYEG has been among the most actively traded stock on Bursa Malaysia with its share price rising two sen to 72 sen with 146.72 million shares transacted. — Bernama