KUALA LUMPUR: CTOS Digital Bhd's (CTOS Digital) outlook appears to be favourable given its new products line-up, customer acquisitions, and resilient earnings growth drivers.
Maybank Investment Bank Bhd (Maybank IB) analyst Fahmi Farid said the compromise assessment had been completed following the independent information technology security firm testing, with no breach identified within CTOS' internal systems.
This came after Bank Negara Malaysia temporarily suspended its Central Credit Reference Information System (CCRIS) services to credit reporting agencies.
"With this report having been submitted to Bank Negara for consideration, we believe the outcome will be favourable, and suspension of CCRIS for credit reporting agency's (CRA) could be lifted by next week," he said in a research report today.
Maybank IB said CTOS Digital's key accounts and D2C (advocating financial literacy and credit health among individuals and end-consumer (D2C), have both registered double-digit growth year-on-year (YoY), driven by digital solutions growth and increase reports sold per day, respectively.
However, the commercial segment was flattish as digital report demand slowed and gross activation was also lower.
"In its key accounts, CTOS Digital has onboarded two CTOS application and decision (CAD) new customers, while eKYC (identity verification solution) onboarded six new customers.
"CTOS overall currently has 430 key accounts, 17,000 customer base for commercial, and 1.4 million user base for D2C."
Fahmi said CTOS Digital is currently identifying a potential target, with a related estimated acquisition spend of a modest RM0.4 million.
"Thus, there will still be about RM21.4 million available for further acquisitions. CTOS Digital has paid down its outstanding debts but would not be averse to gearing up to finance merge and acquisition (M&A) activities in the future should the initial public offering allocation run out."
Meanwhile, he said CTOS Digital had enjoyed a low effective tax rate thanks to its pioneering status, pending renewal as the outcome was expected within the fourth quarter of 2021.
Maybank IB has revised its earnings forecasts for CTOS Digital by 9.0 per cent, 7.0 per cent and 5.0 per cent for FY21, FY22 and FY23, respectively, following outperforming financial results in the third quarter of 2021.
This was due to encouraging operating metrics (especially margin resilience) and the favourable outlook re its market-dominating core credit analytics and decisioning solutions, new growth verticals (digital banking) and M&A optionality."
He said earnings adjustments mainly reflected higher associates contributions, trimming of sales and marketing expenses and other drivers that increase earnings.
