CTOS Digital Bhd, owner of credit reporting agencies in Malaysia and Thailand, have been upgraded to a ‘Buy’ at Hong Leong Investment Bank Bhd (HLBB) with a 52-week target price of RM1.45, 10 sen lower than previously.
In a research note released today (Nov 12), HLIB Research said CTOS results missed expectations which led to the cut its FY24-26 profit estimates by 6-7%.
“Although the profit miss was unpleasant and management guidance was off two quarters in a row, we believe the stock’s risk-reward profile is now skewed more favourably to the upside as we reckon those negatives have been broadly priced in, seeing that its share price has fell 38% from its peak this year,” it said in the note released this morning.
The counter has nine ‘Buy, one ‘Hold’ and one ‘Sell’ with a target price consensus of RM1.66, according to analysts tracked by Bloomberg.
For the third quarter ended Sept 30, 2024 (3Q24), CTOS posted a net profit of RM27.6 million on a revenue of RM79.8 million, up 13% and 20% respectively compared to the same period last year.
For the first nine months, its net profit was up 19% year-on-year to RM73.9 million on RM228.0 million in revenue which was up 21%.
In its exchange filing yesterday, CTOS said the its nine-month revenue growth was achieved from all customer groups, including key accounts, commercial and direct-to-consumer, with higher sales of CTOS Data Systems Reports and comprehensive portfolio review and analytics services.
It said the international operations, comprising alternative data credit score businesses in Indonesia and the Philippines, generated a revenue of RM28.7 million and a segment profit of RM2.6 million during the current period.
It said it was a significant increase compared to the previous corresponding period as the previous corresponding period only consisted of the financial results from the Indonesia business, which was acquired on Sept 1, 2023.
On the company’s outlook, HLIB Research said for key accounts, CTOS’s revenue growth should regain momentum following higher take-up for its solutions and services, coupled with the crystallisation of its digital solution contract delay. – TMR
