KUALA LUMPUR: The outlook remains bright for CTOS Digital Bhd
as analysts anticipate rapid expansion for the credit reporting agency.
Hong Leong Investment Bank (HLIB) Research said CTOS's growth is underpinned by a defensive business model and resilient revenue streams.
It added that newly onboarded customers should begin to ramp up adoption of CTOS's products and services while the expansion into new verticals will help to boost revenue growth in the short-to-medium term.
The research firm is also bullish on CTOS's longer-term prospects as it said the industry is underpenetrated where Asean credit reporting revenue per capita is 38-56x smaller versus developed nations such as the US and the UK.
Separately, it said CTOS is now looking to raise its dividend policy higher to more than 60%.
HLIB, which has a "buy" call on CTOS, maintained its target price at RM1.75.
"Profit estimates unchanged since 4Q23 results were in line but we raised our DPR assumption to 65% from 60%.
"Notably, management revised lower its FY24 normalized bottom-line guidance to RM125-130mil from RM127-135mil but kept FY25 at RM150-160mil," it said.
Meanwhile, Kenanga Research, which also has an "outperform" recommendation on CTOS, said the group will continue to reap its strong position in the credit scoring space with demand likely to accelerate as more digital-centric financial products are introduced to the market.
"Its regional associate footprint also appears to be gaining prominence, making good on past growth aspirations," it said.
The research firm raised its target price to RM2, from RM1.85 previously.
On Wednesday, CTOS announced its FY23 net profit grew to RM118.37mil from RM71.72mil previously, while revenue rose to RM261.44mil from RM194.78mil a year earlier.
It declared a final dividend of 1.7 sen, amounting to a full-year payment of 3.32 sen, which represented a total payout of 70%.
