Selling pressure continues for MyEG, George Kent, after hittng limit down

Bursa Malaysia announces PDT and IDSS activities for 4 stocks which has been suspended until market opens today


Selected stocks which had been the beneciaries of projects from the previous Barisan Nasional government continued to be under selling pressure yesterday as investors were uncertain on the prospect of these companies.

Among the counters that had been affected after the 14th General Election (GE14) shocking outcome were George Kent (M) Bhd, MyEG Services Bhd, Excel Force MSC Bhd and Gabungan AQRS Bhd.

Bursa Malaysia yesterday announced that proprietary day traders (PDT) and intraday short selling (IDSS) activities for the four stocks have been suspended until market opens today.

The action was taken by the bourse operator as the last-done prices of the related stocks dipped more than 15 sen or 15% from their reference prices. The stocks had hit the limit down on Monday.

Limit down refers to a mechanism that automatically stops trading of a company’s stocks to prevent its value from declining further after its share price has slid by 30%.

“The PDT and IDSS activities will only be enabled today, May 16 at 8:30am,” Bursa Malaysia said.

George Kent, a beneficiary of various construction and rail transport related projects, is the biggest loser, shaving 50.76% of its share price value since market opened on Monday.

The company is the project delivery partner for the light rail transit (LRT) project from Bandar Utama to Klang.

George Kent was trading at RM3.94 on May 8, closed yesterday’s trading at RM1.94, erasing about RM460 million from its market capitalisation. The company currently has a market value of RM1.09 billion.

George Kent’s controlling shareholder is Tan who owns a 42.21% stake and is also the company’s chairman

The company’s controlling shareholder is Tan Sri Tan Kay Hock who owns a 42.21% stake.

The company started as a water meter manufacturer before transforming into a mega public transport projects and construction company.

Its share price rose from around 30 sen in 2013 to RM4.42 on March 15 this year, boosted by the pre-election rally and its diversification.

The company’s revenue more than doubled for the financial year ended Jan 31, 2017 (FY17), to RM598.96 million from RM276.8 million in FY13.

Its net profit jumped from RM25.55 million in FY13 to RM101.27 million in FY17.

Public Investment Bank Bhd (Public IB) said in a note that several construction stocks that included George Kent, were likely to come under pressure, as the Pakatan Harapan government, led by Tun Dr 

Mahathir Mohamad, was reportedly looking to review government funded construction and mega-infrastructure projects.

“All told, this comprehensive review and other initiatives under the Pakatan Harapan manifesto are expected to throw the sector into a state of flux, with concerns of contract reviews and delays (or cancellations) of certain projects,” Public IB said.

Another counter which depends largely on government contracts, MyEG saw its share price dropped another 54 sen to close at RM1.27 yesterday after a horrific Monday.

MyEG was listed on the ACE Market in January 2007 at 55 sen a share, but has risen to be one of the top performers on the local market.

Since the post-GE14, the company has lost RM4.7 billion of its market value and now valued at RM4.58 billion.

If GST is abolished, there may not be a need for MyEG’s GSTM project

It derived much of its revenue from government contracts. MyEG provides various electronic government services from road sales of car insurance to foreign workers’ insurance and permit renewals.

MyEG executive chairman Datuk Dr Norraesah Mohamad holds a 30.88% stake of the company.

The company has been on rise and closed last Tuesday trade (prior to GE14) at RM2.58.

It has risen more than 1,700% since May 2013 based on adjusted prices compiled by Bloomberg.

CIMB Investment Bank Bhd downgraded MyEG to ‘Reduce’ and slashed the 12-month target price to RM1.86 from an earlier forecast of RM2.58 in a note yesterday.

CIMB had voiced its concern over MyEG’s risk of losing future earnings from the Goods and Services Tax (GST) monitoring project (GSTM), in which the tax is expected to be scrapped by the newly formed government over the next 100 days.

“Pakatan Harapan indicated in its (election) manifesto that it is looking to cut (abolish) GST in the first 100 days,” CIMB analyst Nigel Foo said.

“If GST is abolished, we believe there might not be a need for MyEG’s GSTM project,” said Foo.

MyEG’s single-largest shareholder is billionaire Wong Thean Soon who is listed at No 29 on Malaysia’s 

Wong is MyEG’s single-largest shareholder who is listed at No 29 on Malaysia’s 50-richest according to Forbes

50-richest according to Forbes. He is the company’s co-founder and the MD.

He holds a 30.76% stake in MyEG through a private vehicle Asia Internet Holdings Sdn Bhd, which is also a substantial shareholder of Excel Force.

Excel Force shares had also been under heavy selling, dropping from 99 sen on May 8 to yesterday’s close of 27 sen.

The shares of the company that provides application solutions for the stockbroking and banking industry a year ago was RM1.18.

Gabungan AQRS is involved in the Sungai Besi-Ulu Kelang highway and LRT Line 3 projects, the construction of Pusat Pentadbiran Sultan Ahmad Shah in Kuantan, Pahang, and a mixed development called One Jessel- ton Waterfront in Sabah.

The company also has an ongoing property development project in Johor Baru.

The stock was trading at RM1.60, a day before GE14, Gabungan AQRS slumped as much as 45% to close at only 88 sen yesterday.