Censof to continue to strive into adopting new technologies to further enhance its operational performance on the back of the govt’s MyDigital Blueprint initiative

by ANIS HAZIM / Pic source: censof.com

RAKUTEN Trade Sdn Bhd has set a ‘Buy’ call on Censof Holdings Bhd with a target price of 52 sen based on 15 times price-earnings ratio over the financial year of 2023 (FY23) earnings per share.

Rakuten VP of research Thong Pak Leng expects Censof will continue to strive into adopting new technologies to further enhance its operational performance on the back of the government’s MyDigital Blueprint initiative.

“Censof provides an extensive portfolio of financial management software solutions that cater to start-ups, small and medium enterprises (SMEs) as well as large corporations.

“We expect Censof to register net earnings of RM18.1 million and RM20.5 million for FY3/23 and FY3/24 respectively driven by improving demand in all its business segment and recurring incomes,” Thong said in a research note today.

The analyst noted that Censof’s financial management solutions government (FMS-G) is the key revenue and earnings contributor for the group, contributing 72% of its revenue and 67% of profit before tax, as well as enjoys a RM42 million recurring maintenance revenue.

Currently, Censof is the leading provider of FMSs developed on Standard Accounting System for Government Agencies compliant standard serving 90 government agencies.

Meanwhile, its FMSs commercial and SME (FMS-C) division provides accounting software for SMEs, namely ABSS Asian Business Software Solutions with a client base of more than 400,000 in Malaysia, Singapore, Hong Kong and others with an annual recurring income of RM15 million.

“FMS-C also provides a wide range of business solutions such as enterprise resource solution, customer relationship management, payroll and mobile apps to 60 commercial clients in Malaysia and Singapore,” he said.

Additionally, the business solutions services have recurring revenue of RM2.1 million.

As of April 30, 2022, Censof has a project basis orderbook of RM45 million and a maintenance orderbook of RM40.7 million which provide great earnings visibility for the next two years.

Its balance sheet is also strong with net cash of RM17.1 million as of FY3/22.