Saturday, April 9, 2011

I like MYEG but...

This one company caught my eyes even before the days where it got involved in sponsoring the EPL or some of the football shows on ESPN. To me it has solid business, a brand that is getting noticeable, a winner in the e-Government space. Revenue is ever growing, so is its profitability.

This company has the trait that will make me continue to lookout for its performance. In my mind, the business it is in will continue to grow and the fact that its competitors are far behind. Name me its competitors in the online e-government space - I could not even remember any name (that speaks for itself).


Nevermind the price at 20 - 22x PE, there is this little thing which sometimes make me a little wary: - 2 of its directors are UMNO's people and in the director's profile, they are not shy of telling that they are UMNO people. In reality, I have not come across such things in any other companies' directors profile except for this company. Usually, political figures do not reveal their party's name in the director's profile but why MYEG's does that I am having a suspect. Is it revealed by mistake or it actually does it on purpose, I do not know. The 2 person are Datuk Dr Norraesah and Raja Munir Shah (check it out in the director's profile page in the Annual Report as reproduced below)

Profile of Dr Norraesah

You see, Dr Norraesah is in several public listed board, but as far as I know MYEG is the only one the UMNO word is revealed. Are they trying to reveal that UMNO is Government and without UMNO people there is no e-Government for MYEG? Then be very afraid.

Profile of Raja Munir

I tell you why investors have to be wary of this, although it is common for political figures to involve themselves into business. (No prizes either for second guessing how MYEG got its license to be in the business where they are today.)

Suspect expenditures can however happen due to the need to contribute for political funds. You see political people do not really work in the companies they are representing. They just get you the contract or license for your business. And their reward are not little. If you are an investor in the business they are in, be afraid of this might happen - and as an investor you might lose out to them - especially UMNO people. Of course, you would say without them, MYEG will not be where it is today. True. Then it is about ethical investing. Getting assistance from Government is allright, but through unfair advantage? That is not the trait of a winning company. Winners do not need that to be winners. Only monopolies need that. Also, in my encyclopedia of investing, these types of companies usually do not give a damn to its shareholders. Look at Vincent Tan, Syed Mokhtar - they have some of the greatest businesses in Malaysia, but do they look like they care? Good businesses they keep to themselves. Not so good businesses, they share with you and I. I would not be surprised that much of their political contributions derive from the public companies they led - companies that you and I probably have shares in. How do you account for that?

Let me give an example. Have you ever seen monopolies being run well in Malaysia? Example, BERNAS (under Syed Mokhtar). Not that Syed Mokhtar does not own well-run companies. Look at Honda. Just that there is this little thing about monopolies that is a suspect to an investor.

p.s. I am not against politically linked companies, but in this particular case I am only afraid of unaccountable expenses which may go overly excessive. MYEG however has proven its consistent performance over the last 5 years - which is a positive. For me, let's continue to monitor this company. It has a good business. That's for sure

Serious Investing!


Unknown said...

What do you think of MYEG today?

Goh said...

i like your point of view :)