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KUALA LUMPUR (December 10): MyEG Services Bhd’s share price fell more than 4% in morning trading in Bursa Malaysia today after the e-government service provider announced yesterday its placement proposal of up to 220 million (220,000,000) of new actions to raise funds to finance, among others, the purchase of fixed assets by the company and related solutions for its electronic government concession.
As of 9:07 am today, MyEG’s share price was nine sen or 4.59% lower at RM1.87 as investors weighed the possibility of a dilution of earnings per share (EPS) for the company as a result. an increase in the number of its shares derived from the placement of new shares with third-party investors.
The stock saw some four million shares traded. At RM1.87, MyEG had a market capitalization of approximately RM6.55 billion based on the latest reported number of issued shares of the company at around 3.5 billion units.
Yesterday, MyEG said in a Bursa presentation that the placement will involve the issuance of up to 220 million new shares, representing up to approximately 6.29% of the total number of MyEG units issued.
“The proposed placement is not expected to have any material effect on the group’s earnings for the financial year ending December 31, 2020 (FY20) as the use of the proceeds may take some time before they can create an impact. in the group, the group will be diluted correspondingly as a result of the increase in the number of MyEG shares arising from the proposed placement, ”the company said.
Today, MIDF Amanah Investment Bank Bhd analyst Martin Foo Chuan Loong wrote in a note that the research house, however, sees the new MyEG share placement as a better financing option compared to borrowing.
“[We] keep [our] ‘neutral’ (MyEG share rating) with a revised target price (TP) of RM2, ”Foo said.
He said the previous MIDF TP for MyEG was RM1.58.
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