WITH findings by independent information technology (IT) security firm revealing no breaches within its internal systems, CTOS Digital Bhd can expect a favourable outcome with the lifting of the Central Credit Reference Information System (CCRIS) suspension for credit reporting agencies (CRAs) as early as next week.
Such is the view of Maybank IB Research, given CTOS has already completed its compromise assessment report that has already been submitted to Bank Negara Malaysia (BNM) for consideration.
Nevertheless, the research house continues to assume breaches in security/compliance that could result in the revocation of its CRA certificate or breaches to the Personal Data Protection Act as a downside for CTOS.
“CTOS’ outlook appears favourable, given its new products line-up, customer acquisitions as well as resilient earnings growth drivers,” projected analyst Fahmi Farid in a company update.
Maybank IB Research maintained its “buy” rating on CTOS with a marginally higher target price of RM2.35 (from RM2.34 previously) based on 2.8 times FY2022 price/earnings-to-growth (PEG) target (in-line with global peer basket mean).
Moving forward, the research house expects CTOS to be on the lookout for merger and acquisition (M&A) opportunities.
From its initial public offering (IPO) proceeds allocated for acquisitions of RM58.7 mil, CTOS utilised RM26.8 mil and RM10.1 mil for additional stakes in Thailand’s Business Online Public Company Ltd (BOL) (2.6%) and RAM Holdings Bhd (4.6%), respectively.
“CTOS has currently identified a potential target with related estimated acquisition spend of a modest RM400,000,” revealed Maybank IB Research.
“Thus, there will still be circa RM21.4 mil available for further acquisitions. CTOS has pared down its outstanding debts but would not be averse to gearing up to finance M&A activities in the future should the IPO allocation run out.”
Moreover, CTOS enjoys a low effective tax rate thanks to its pioneer status which is pending renewal (outcome expected within 4Q 2021). Meanwhile, for its CTOS digital service (CDS) and CTOS Basis of which their related licenses need to be renewed annually, renewals were completed in September this year.
At 10.43am, CTOS was down 1 sen or 0.5% to RM1.99 with 6.15 million shares traded, thus valuing the company at RM4.38 bil. – Oct 21, 2021
