INVESTORS of CTOS Digital Bhd can heave a sigh of relief as the move by Bank Negara Malaysia (BNM) to temporary suspend the access of credit reporting agencies (CRAs) to its central credit reference information system (CCRIS) is merely precautionary in response to possible cyber-attacks as opposed to data leakages.
Such is the feedback obtained by Maybank IB Research from its discussion with CTOS’ management following concerns stemming from CRAs’ involvement in reported data leakages or that their systems have been compromised.
“CTOS has never had data leakages in the past and assures that its data security systems are as robust as that of the banking system,” justified analyst Fahmi Farid in a company update.
“Aside from its own comprehensive review, CTOS has also engaged an independent security firm to review its security processes, infrastructure and protocol, to be submitted to BNM over the course of a day or two.”
As such, the research house expects the resumption of CCRIS’ service to be much faster than its previous hypothetical assumption of one month.
“CCRIS data is used mainly in its own CTOS Reports as well as in its eKYC product and scrubbing services,” it said.
As per its previous hypothetical scenario, Maybank IB Research noted that should revenue from the sale of reports be disrupted for a month, the impact to CTOS’ FY2021 earnings would be a minimal 5%.
“The impact would thus be much less for a shorter duration,” added the research house.
Moving forward, Maybank IB Research said CTOS is seeing strong recovery post-lockdown operationally across all its business segments.
“Marketing efforts have stepped up in the consumer segment with the offering of free access to SecureID for a limited period while on the small medium enterprise (SME) front, there will be a significant upgrade to its Credit Manager product,” noted the research house.
As for the new business segments that the company is targeting – property, auto and insurance – CTOS plans to roll out its very first Motor Vehicle Report soon while at the same time getting closer to working with the insurance industry as well.
“It has done an upgrade to the Tenant Screening Report and this will be released soon. There is no news yet on its pioneer tax status but the management maintains it expects an October/November timeline for a reply,” added Maybank IB Research.
All-in-all, Maybank IB Research maintained its “buy” rating on CTOS with a target price of RM2.17 based on FY2022 price/earnings-to-growth (PEG) target of 2.6 times in-line with global peer basket median.
At 9.55am, CTOS was up 1 sen or 0.53% at RM1.91 with 2.57 million shares traded, thus valuing the company at RM3.82 bil. – Oct 6, 2021
