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Singapore Investment


  CTOS 5301 CTOS DIGITAL BERHAD | Revenue Continues to Record High (Q1FY2023)

CTOS Digital Berhad (CTOS, 5301), the only listed credit reporting company in Malaysia, recently announced its impressive quarterly financial results.

Before that, let me briefly introduce this company.

CTOS, which went public on July 19, 2021, is a provider of comprehensive commercial credit risk solutions, digital software development, outsourcing, and training services. The company's primary revenue is categorized into four major customer groups, including Key Accounts, Malaysia Commercial, International Commercial, and Direct-to-Consumers. Its clients come from various industries, including banks, financial institutions, insurance companies, telecommunications companies, large corporations, small and medium-sized enterprises, and ordinary consumers.

Most of CTOS's revenue comes from its Malaysian business, with around 17,000 customers from different sectors, including companies and SMEs. The company usually provides credit rating services and other companies' information to its customers through subscription services, as well as user-friendly credit management software tools.

Let's now explore CTOS's latest performance (Q1FY2023).

The revenue comparison showed an increase of around 39.62% YoY and 12.99% QoQ, with approximately RM59.59 million in revenue as of March 31, 2022, compared to RM42.68 million in the same period last year. This is due to the increased business revenue from its three major customers, i.e., Key Accounts, Malaysia Commercial, and Direct-to-Consumers, which grew by around 66.48% and 63.90%, respectively. In terms of geographical distribution, CTOS's businesses in Malaysia and internationally also increased by 41.29% and 51.06% YoY, respectively. The company's revenue increased by around RM6.85 million or 12.99% compared to the previous quarter, driven by the rising demand for CTOS data system reports, digital solutions, and comprehensive portfolio reviews and analysis services.

The post-tax profit comparison showed an increase of around 32.85% YoY and 20.76% QoQ, with a net profit of approximately RM16.58 million this quarter compared to the same period last year. The company's profit before tax (PBT) also increased by 32.09% YoY to around RM21.94 million, thanks to the strong business performance. However, due to the increase in finance costs and a slight decrease in the share of profits from associated companies, part of the PBT was reduced. The company's PBT grew by approximately 20.76% compared to the previous quarter, driven by the overall strong revenue performance.

It is worth mentioning that the company also announced a first interim dividend of RM0.043 this quarter, with ex-dividend on May 5 and payment on May 30, 2023.

With the continuous recovery of the Malaysian and regional economy, the company expects its subsidiaries and business units to continue their growth momentum. CTOS plans to expand its Direct-to-Consumers business through financial literacy programs and cooperation with approximately 15 million active credit consumers in Malaysia. Additionally, the company will continue to develop its collaborative strategic investments in Malaysia and Thailand. By providing unique and valuable end-to-end digital lending solutions, the company expects to enhance its value proposition to customers from banks to SMEs. Therefore, the management is optimistic about CTOS's medium to long-term prospects.

In summary, CTOS Digital Berhad has a bright future ahead with the growth in demand for credit reporting in Malaysia's digital economy.


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