PETALING JAYA: CTOS Digital Bhd
, whose single-largest shareholder is the Employees Provident Fund (EPF), is moving towards reducing its dependence on Malaysia and increasing revenue share from overseas.
From below 13% of revenue in financial year 2024 (FY24), CTOS is looking to increase its international exposure to about 20% by 2028.
This is achievable with Indonesia turning profitable in the first quarter of financial year 2026 (1Q26), along with regional expansion in the Philippines, stated Hong Leong Investment Bank (HLIB) Research.
“This scaling strategy is strategically accretive, leveraging on existing infrastructure to drive superior incremental margins while reducing reliance on the more mature Malaysian market.”
The EPF has a 23% stake in credit reporting agency CTOS.
HLIB Research said CTOS has guided for a 10% to 12% revenue compound annual growth rate (CAGR) for 2026 to 2028, fuelled by high-margin analytics and regional scaling in Indonesia and the Philippines.
In addition, the research house said the Consumer Credit Act 2025 serves as a primary growth catalyst for CTOS, moving forward.
The law compels “buy now, pay later” (BNPL) providers and non-bank lenders to utilise credit reporting agencies’ data, effectively expanding CTOS’ addressable market.
“Management estimates this could contribute 5% to 10% of revenue over the next three years,” it said.
Based on Bank Negara Malaysia’s 2025 annual report, BNPL balances stand at RM4.9bil (0.3% of household debt) across 7.5 million users with an about 3.3% overdue ratio.
“With BNPL payment adoption projected to grow at a 19.8% CAGR (2026 to 2030) as reported, demand for credit reporting is set to accelerate.
“Onboarding thin-file borrowers further enhances CTOS’ proprietary dataset, creating a flywheel effect: higher enquiry volumes lead to richer data, driving stronger monetisation via advanced analytics and fraud solutions,” according to HLIB Research.
On CTOS’ margins, the research house said the pressures are easing.
It pointed out that the management targets a cost-to-income ratio of 40% to 43% by 2028, down from 46%, driven by digitalisation and workforce optimisation.
With cloud migration completed in 1Q26, focus has shifted to artificial intelligence-led automation to streamline operations.
“While the expiry of tax incentives in late 2026 may temporarily weigh on earnings, ongoing process optimisation should sustain positive operating leverage.
“This cost discipline remains pivotal in delivering its targeted return on equity of 16% to 18%.”
HLIB Research has a “buy” call on CTOS, with an 89 sen target price.
Meanwhile, Kenanga Research upgraded CTOS to a “buy” with a higher target price of 83 sen.
It said the group’s 1Q26 core net earnings, which rose by 35%, met expectations.
The research house noted that CTOS typically reports a stronger second-half due to seasonal factors, coupled with a better project flow expected during the later part of the year.
“With new direction and long-term strategies in tow, CTOS is expecting to sustainably deliver a 10% to 12% growth in earnings. This should be enabled by more partnerships to be developed in addition to opportunities with BNPL providers,” it added.
Kenanga Research said CTOS expects FY26 revenue of RM345mil to RM355mil and a net profit of RM95mil to RM100mil.
“To achieve this, the group intends to leverage on more digital partnerships (beyond key partner TNG Digital Sdn Bhd) to widen the distribution of its services.”
Looking ahead, Kenanga Research believes the period of guidance downgrades is likely behind CTOS, with a new management in place and a clearer strategic focus on core financial institution clients.
This comes particularly as prior ambitions to expand aggressively into small and medium enterprises appear less suited to the current uncertain macro environment.
