The little things that make Jobstreet preferred over MYEG

Both companies I like for dividends and growth prospects. They are probably 2 of the better dotcom companies that are still up and running, after the dotcom crisis in Malaysia. (MYEG was formed after the crisis)

Having survived, dotcom companies such as Jobstreet and MYEG have very strong cashflows while their operational costs are very manageable. Jobstreet is the No.1 jobs website in Malaysia with commendable operations overseas (Philippines, Singapore), while MYEG is the No 1 e-government site in Malaysia. Both are very profitable with continuous good growth prospects.

MYEG's (Price : RM0.645) current PE based on most recent Audited Report is around 17.5x with PAT at RM22.13 million. Jobstreet (Price : RM2.17) registered a PAT of RM43.7 million for FY2011, hence valuing them at 15.9x PE.

Tax

Currently, MYEG only pays 3.6% tax due to it getting tax exemptions from being a MSC status company. The tax exemption was until 17 July 2011. However as I noticed from its latest management accounts as at 31 Dec 2011, the company is using another subsidiary for it to enjoy continuous tax exemptions. (Wondering how is this possible)

Jobstreet on the other hand paid around 23.8% tax as they no longer qualifies for pioneer status.

Development costs


MYEG's policies with regards to R&D. They capitalised some parts of their development costs.

MYEG's R&D accounting policies

What is the impact? This accounting measure for FY2011 probably improved the company's PAT by around RM1.2 to RM1.3 million. See below.

On the other hand, Jobstreet expensed all its R&D expenses.

Jobstreet's R&D accounting policies

Both practices are perfectly fine within MASB 4 (Malaysian and International Accounting Standards).

However, you can see that MYEG is benefiting still from tax benefits and from its accounting policies, it registers a higher accounting profits. On the other hand, Jobstreet probably is more attractive as a company in terms of current valuation as its pays full taxes and expensed all its R&D costs.

In fact, I am still not happy on how MYEG can transfer its tax benefits to another subsidiary (if its true).

Happy Investing!

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