PETALING JAYA: Kenanga Research has cut credit reporting agency CTOS Digital Bhd
’s forecast earnings for next year (FY26) by 4%, following the company’s stake disposal of Experian Information Services (M) Sdn Bhd.
The research house said CTOS’ decision to divest its 26% holding in Experian for RM80mil in cash, was an unanticipated move.
The research house added that proceeds from the disposal would likely be directed towards the group’s long-term goals.
The research firm said, “CTOS originally acquired the stake in July 2019 for RM56.2mil, translating to a fair value gain of RM23.8mill.”
However, the decision to divest was widely viewed as unexpected as the research house earlier anticipated the group to invest in its organic growth.
Kenanga Research nonetheless highlighted confidence for CTOS’ product development pipeline to gradually make up for the loss of Experian’s earnings contribution.
“Of the RM80mil from the disposal, RM49mil is earmarked for debt reduction, with the remainder largely allocated toward working capital,” Kenanga Research said.
CTOS Digital’s gearing stood at 0.2 times, which analysts said was well-managed.
Kenanga Research has upgraded its call to “market perform” on CTOS, while maintaining its target price of 79 sen, amid share price decline, prior to riding a three-month high. The research house’s target price was based on a discounted cash-flow model after a 23% drop in the share price.
