PETALING JAYA: CTOS Digital Bhd is expected to record a compounded annual growth rate of 22% from this year to 2024.

       This will be mainly driven by the broadening of data assets which will move up the value chain and deepen its share of wallets in the credit bureau industry.

       According to UOB Kay Hian (UOBKH) Research, there will be further vertical expansion and deployment of new solutions into other economy sectors and synergies and incremental revenue from newly-acquired associates – Business Online Public Company Ltd, Juris Technologies Sdn Bhd (JurisTech) and Basis.

       JurisTech is expected to immediately contribute to about 18% of CTOS’ 2022 net profit post-acquisition, according to the research house. CTOS is anticipated to have a meaningful credit growth, which will spur demand for credit and risk information solutions, the research house said in its latest report.

       RHB Research added that CTOS’ FY22 growth is on track, as it is leveraging on the continued recovery of the Malaysian economy with new account activation, along with the higher adoption and improvement in financial literacy.

       Stronger numbers can be expected from its associate companies, especially on the recent acquisition of JurisTech, which should accelerate its growth plans into the new verticals and expand its offerings in end-to-end digital solutions.

       Hong Leong Investment Bank (HLIB) Research added that cumulatively until end-February, it has noticed that loan applications had increased by 11% year-on-year. The gradual expansion into new verticals and the emergence of digital banks will help to boost revenue growth in the short and medium term.It said CTOS longer-term prospects are also bright, considering that the industry is under- penetrated, where Asean credit reporting revenue per capita is some 38 to 56 times smaller than developed nations like the United States and Britain.

       CTOS had announced its first quarter financial year 2022 (1Q22) results which were within most analysts’ expectations while the second half is expected to be a seasonally stronger period.

       RHB Research said the growth in revenue was mainly driven by the growing demand for CTOS data systems reports, as well as its digital solutions and comprehensive portfolio review and analytics services.

       Earnings, on the other hand, were boosted by lower interest costs and the absence of foreign exchange losses, which more than offset the hike in employee costs and information technology support expenses.

       CTOS Digital’s 1Q21 reported core net profit of RM13.2mil, up 60.8% from the previous corresponding quarter.

       RHB Research, HLIB Research and UOBKH Research have maintained their “buy’’ calls on the stock with a target price of RM2.36, RM1.95 and RM1.80 a share respectively.