RHB Research remains bullish on CTOS Digital Bhd despite the latest debacle following Bank Negara Malaysia’s (BNM) move to temporarily suspend all credit reporting agencies’ (CRA) access to the central credit reference information system (CCRIS) in light of the alleged data leak of several governmental bodies.
At 10.04am, CTOS’ which was the most actively traded stock saw its share price dipping 6 sen or 3.12% to RM1.83 with 44.8 million shares traded, thus valuing the company at RM3.72 bil. The counter had earlier saw its share price plunging to an intra-day low of RM1.80.
The research house’s conservative worst case scenario suggests CTOS to incur a RM14 mil (loss of revenue) and RM10m (net loss/month).
“We deem this situation as highly unlikely given the level of disruptions to the financial system, especially for non-bank lenders,” opined analyst Liew Wai Hoong in a company update.
“This would likely result in tightening in lending especially to the B40 group which goes against BNM’s agenda.”
BNM has temporarily suspended all CRA’s access to CCRIS from Oct 1 with no clear date on the resumption yet.
The central bank has stressed that such a measure is proactive and pre-emptive in nature in light of the recent alleged data leak involving various governmental bodies such as the National Registration Department (NDR) and Inland Revenue Board (IRB).
The central bank has also promised access will resume once the CRAs complete data security assessments.
RHB Research further deemed any share price pullback to be an over-reaction by the market.
“We advise investors to buy on weakness as (i) there is no evidence pointing towards CTOS being guilty of data leak; and (ii) our structural growth thesis remains very much intact,” noted the research house.
Moving forward, RHB Research is of the view that the biggest downside risk is the event whereby CTOS’ database has indeed been compromised.
“At this juncture, it appears that the alleged leak did not originate from CTOS but we do not rule out the remote possibility of any compromise revealed by the assessments.
“In this unlikely event, we could see a serious valuation de-rating.” – Oct 4, 2021
