PETALING JAYA: CTOS Digital Bhd
’s cost discipline, automation, and productivity gains from artificial intelligence (AI) and cloud adoption are expected to drive the cost-to-income ratio from the current 46% to 42% over the next three years.
CTOS is strategically transforming into an intelligence provider with various multi-pronged growth strategies in new collaborations, customer acquisitions, and cost optimisations, as well as various new digital and analytic product rollouts, said RHB Research.
“At below-mean/peers’ valuation of only 16 times price-to-earnings ratio, both the earnings and share price are positioned for a recovery.
“This is on the back of sector tailwinds, and as CTOS executes its new transformation strategy and regains investor confidence under the leadership of the new management team,” RHB Resarch further said.
UOB Kay Hian (UOBKH) Research added that CTOS will need to continuously launch new products, enhance analytics capabilities and expand use cases to ensure its offerings remain integral to client workflows as credit assessment models evolve.
“While AI-driven credit assessment tools leveraging alternative and non-traditional data sources could potentially disrupt elements of the traditional credit bureau model over time, we believe the risk to CTOS is moderated by its large-scale, proprietary dataset accumulated over decades.
“The depth, quality, and regulatory acceptance of CTOS’ data remain difficult to replicate and continue to anchor its relevance to financial institutions,’’ it said.
Moreover, UOBKH Research maintains its “hold” call with a lower target price of 78 sen a share from 95 sen, based on 18 times 2026 price earnings ratio (PER) from 22 times.
“While there is a clearer roadmap for the group under the new chief executive officer, we note that these initiatives, such as investments in AI and automation, will take time to materialise and are underpinned by execution risk,’’ it said.
RHB Research said it maintains its earnings forecasts, “buy” recommendation, and discounted cash flow-based RM1.11 a share target price.
The downside risks cited include changes in the regulatory environment, slower-than-expected adoption, litigation, and data security breaches.
Hong Leong Investment Bank (HLIB) Research also maintains its “buy” call with a target price of 89 sen a share.
Its valuation implies a forward financial year 2027 PER of 23.8 times.
CTOS shares were last traded at 73.5 sen yesterday.
“The recent share price weakness has further enhanced the risk/reward profile, with the stock currently trading at deep discounts, near its five-year historical troughs-on both a PER and price-to-book basis.
“That said, a meaningful re-rating will likely hinge on the new management team demonstrating consistent execution and establishing a credible track record in delivering on its revised strategic roadmap,’’ HLIB Research said.
It added that CTOS first quarter of financial year 2026 core earnings of RM18.4mil came in at 20.8% and 18.4% of its and the street’s full-year projections, respectively.
“We deemed the results to be in line, backed by a stronger earnings performance outlook in the second half of financial year 2026,’’ HLIB Research added.
