PETALING JAYA: CTOS Digital Bhd
’s recovery prospects will hinge on how quickly it restores affected services and rebuilds customer confidence following a cybersecurity incident, with analysts divided over the extent of the near-term damage to its earnings and valuation.
While the disruption is expected to weigh on its financial performance, the group’s recurring income and established position in the credit reporting industry could support a recovery once services resume.
RHB Research maintained a “buy” rating on CTOS, but lowered its target price to RM1.06 from RM1.10, viewing the recent share price sell-off as excessive despite the potential earnings impact of up to RM12mil in financial year 2026 (FY26).
“Despite this, we believe the selldown is overdone following the isolated event, which undermines the strength in its core solutions and leadership position in the market,” it said.
The research house warned that prolonged suspension of access to the Central Credit Reference Information System (CCRIS) could affect credit reports and scoring products across all business segments, with the consumer segment bearing the brunt, followed by key accounts.
It estimated that every additional week of disruption could reduce FY26 net profit by RM1.3mil, reflecting lost revenue and expenses related to remediation, restoration and stronger cybersecurity measures.
Nevertheless, RHB Research expects a relatively swift recovery once services resume, given the importance of a credit reporting agency to financial institutions. It noted that a previous precautionary suspension of CCRIS access for all credit reporting agencies in 2021 lasted six weeks.
BIMB Research also maintained a “buy” call, but cut its target price sharply to 55 sen from 91 sen, lowering its price-to-free-cash-flow valuation multiple to 15.2 times from 21.1 times.
“The de-rating accounts for potential more stringent compliance and cybersecurity costs, alongside slower client onboarding, which could weigh on earnings growth,” it explained.
“While we believe CTOS’ long-term fundamentals remain intact and the incident represents a temporary setback, we adopt a more conservative valuation approach until service reliability is fully restored and the longer-term commercial impact becomes clearer,” it added.
Kenanga Research, meanwhile, downgraded CTOS to a “market perform” from “outperform”, citing heightened operational, regulatory and reputational risks, as well as weaker near-term earnings visibility amid the possibility of customers switching to rival credit bureaus.
The research firm considers the incident a temporary setback rather than a structural impairment of the business, noting that about 65% of revenue remains unaffected.
However, it conservatively assumes affected services will remain offline until end-December 2026, around 10 weeks beyond management’s base case.
“A prolonged outage would also raise the risk of customer leakage to rival bureaus and potential regulatory action, neither of which is quantified in management’s guidance,” Kenanga Research said.
One analyst told StarBiz that the pace of service restoration and the ability to retain customer confidence would be key in determining how quickly CTOS recovers from the incident.
“While the incident creates near-term uncertainty, CTOS’ established market position should remain an important factor in its longer-term recovery,” he said.
