KUALA LUMPUR: Despite the temporary suspension of Bank Negara’s central credit reference information system (CCRIS), CTOS Digital Bhd’s revenue momentum is expected to pick up, bolstered by the digitalisation trend and recovery in the economy.

       Brokerage firms see the temporary CCRIS suspension as a “minor hiccup” which affected the group’s revenue only in October.

       RHB Research raises the group’s financial year ending Dec 31, 2021 (FY21) forecast earnings by 10% and FY23 forecast earnings by 6%.

       “We revised FY21 forecast earnings by 10% largely due to the more-resilient-than-expected revenue.

       “We believe that our forecast is conservative enough to absorb any impact arising from the CCRIS suspension.

       “We have also raised FY23 forecast earnings by 6% in anticipation of the wider adoption of digital banks,” added the research house.

       CTOS Digital’s net profit for the third quarter ended Sept 30, 2021 (Q3 FY21) rose 9.32% to RM11.67mil from RM10.68mil in the corresponding period last year driven by higher revenue from its Malaysian and international segments.

       In a filing with Bursa Malaysia, the group’s quarterly revenue was up 13.36% to RM38.57mil, from RM34.02mil a year ago.

       Despite the lockdown in Q3 FY21, RHB Research pointed out that the group continued to show strong business resilience, saying that the revenue was more resilient than it expected.

       “Commercial segment was only 2% lower quarter-on-quarter,” it said.

       Meawhile, Kenanga Research said the group’s Q3 FY21 results were above its and consensus expectations on the back of anticipation of Q4 FY21 improvements.

       “Management expects a demand rebound in the take-up of its solutions, which is in-line with past post- lockdown restriction trends.

       “While Bank Negara’s CCRIS data suspension is still on-going, we draw hints of potential resolution from CTOS’ explanatory notes which states that the impact is likely to be only for October and immaterial to FY21 revenue,” it added.

       However, the research house has downgraded the stock to “market perform” with a higher target price of RM2 from RM1.75 previously.

       This is in view of potential weakness in share prices based on rich valuations of price-to-earnings ratio of 57 times based on FY22 forecast, potential share overhang as well as potential risk of drag to the central bank’s CCRIS data access suspension, said Kenanga Research.