CTOS ready for largest Main Market listing this year, SMEs to drive growth
KUCHING: CTOS Digital Bhd (CTOS), which is slated to list on the Main Market of Bursa Malaysia Securities Bhd (Bursa Malaysia) today, is poised to be the largest IPO this year with a market capitalisation of RM2.4 billion.
Analysts believe that small and medium enterprises (SMEs) are expected to drive its future growth as digital adoption amongst SMEs are accelerated by the pandemic as well as rising financial literacy among the masses.
CTOS recently reported a 64 per cent rise in normalised net profit attributable to shareholders (PATAMI) to RM15 million in the second quarter ended June 30, 2021 (2Q21) from RM9.1 million in the previous corresponding quarter (2Q20).
In the first half ended June 30, 2021 (1H21), normalised PATAMI grew 70 per cent to RM31.4 million in 1H21 versus RM18.5 million in 1H20. This was on the back of group revenue improving 17 per cent to RM75.8 million from RM64.7 million a year ago.
CTOS Digital group chief executive officer Dennis Martin said: “Our strong growth in the most recent quarter and first half of the year testifies to our resilient business model despite the implementation of various movement control orders in Malaysia.
“We will continue to deliver innovative digital solutions to our extensive Key Accounts customer base. This is on top of growing our commercial segment through new activations and educating and providing the tools for SMEs and individuals to make informed financial decisions.”
Meanwhile, in an initiation report, the research team at KAF Equities Sdn Bhd (KAF) pointed out that the group’s FY20 core earnings grew at a three-year CAGR of 22.2 per cent.
“Going forward, we project core earnings to grow at a threeyear CAGR of 19 per cent from FY20 to FY24, premised on the more robust growth from the underpenetrated SME segment.
“CTOS currently serves about 17,000 SMEs in Malaysia, while it is estimated that 98.5 per cent of the 920,624 business establishments in the country are SMEs. Therefore, there is still much room to grow,” it said.
It also highlighted that the Covid-19 pandemic has accelerated digital adoption in business environment.
“The relatively underpenetrated credit reporting industry in Malaysia and Asean will receive strong tailwinds propelled by the digital adoption of SMEs accelerated by the pandemic and increasing financial literacy among the masses.
“As a leading credit reporting agency in Malaysia with a 71.2 per cent market share, CTOS is in a prime position to benefit from the promising growth upside of the industry.
“The group offers a comprehensive digital solution to effectively evaluate credit risks and make sound business decisions throughout the customer life cycle. None of its domestic competitors provide the same mix of digital solutions,” it added.