KUALA LUMPUR: Analysts are bullish over CTOS Digital Bhd's proposed aquisition of a stake in Juris Technology Group as the purchase is expected to enhance future earnings.

       In a report, RHB Research said the acquisition of Juris will enable the group to accelerate its growth plan and move up the value chain in building an end-to-end digital lending solution - from loan originating and management to collections.

       "Aside from leveraging on Juris’ strength in its enterprise software and platform capabilities, and offering it to existing client, CTOS will also be able to tap into Juris’ sales team and existing client relationships," said the research firm.

       It noted immediate potential synergies including digital solutions to lenders, analytics solutions with machiner learning and AI capabiities to financial institutions, SME collections as an add-on module and lead-generating solutions to executive and support in coverting leads to sales.

       "In short, we are excited about the potential 20-30% growth trajectory in the next two years, and the prospects of integrating its data and analytics solutions with the software and platform, to develop a new proposition in the new economy," it added.

       RHB has a "buy" call on CTOS but lowered its target price to RM2.40 after rolling forward its valuation base year and taking into account the dilution impact from fundraising.

       Meanwhile, Hong Leong Investment Bank (HLIB) Research expects the Juris acquisition to enhance CTOS's FY22 net profit.

       "The group is expecting that Juris’ revenue and profit after-tax growth in FY22F to be more than 20%.

       "The group also guided that the 49% acquisition of Juris Tech would immediately contribute an additional 13% to CTOS’ FY22F net profit – about RM9.5mil based on our estimates," said HLIB.

       The research firm maintained its "buy" recommendation on CTOS with a target price of RM2.45 a share.