CTOS looks at 20% growth from Fy23 onwards

PETALING JAYA: CTOS Digital Bhd is committed to achieving about 20% compounded annual growth rate (CAGR) for financial year 2023 (FY23) and beyond.

This comes after it delivered a strong FY22 core profit after tax and minority interest of Rm85mil, supported by growth across all business segments and contributions from associates.

Kenanga Research remains optimistic on CTOS’ continuous growth strategy of expanding product solutions, cross-selling and customer acquisitions – all to be achieved on the back of growing adoption of digital solutions.

Hong Leong Investment Bank (HLIB) Research, meanwhile, said despite the slower economic growth, it believes CTOS will grow at a quick rate given its defensive business model that has resilient revenue streams.

Besides that, the expansion into new verticals and emergence of digital banks will help to boost revenue growth in the short and medium term.

Also, RAM Holdings’ full-year profit inclusion through equity accounting at a larger 57.7% stake in FY23 would augment the bottom line.

For longer-term prospects, it is also bright, considering the industry is under-penetrated, where Asean credit reporting revenue per capita is at 38 times – 56 times smaller than developed nations such as the United States and Britain, said HLIB Research.

Kenanga Research also said following an acquisition spree over the past two years, CTOS is reaping the fruits of its labour with an increase in the share of profits.

On top of the growth trajectory from its business-as-usual operation, the CTOS management is also upbeat on its international operations.

It will leverage on Business Online, the adoption of the digital lending platform and the cross-selling opportunities with Juris Technologies and product expansions such as the new Digital Issuer Platform with Bursa Malaysia, ESG Ratings and SME Credit Ratings with RAM.

CTOS’ management is also exploring share buyback initiatives to enhance shareholder value, improve return on equity and optimise the capital structure, as the company is able to generate healthy free cash flow of about Rm100mil per annum, while the net gearing level remains healthy at 29%.

Kenanga Research did not make any major changes to its forecasts, except for minor tweaks post-model upkeeping exercise.

It has retained a “buy’’ call with a target price (TP) of RM1.92 a share.

HLIB Research has also kept its forecast intact and maintained its “buy’’ call on the stock with a TP of RM1.70 a share.