Malaysia Results Review
Technology | Technology
28 July 2025
CTOS Digital (CTOS MK): Recalibrating Expectation; Stay BUY
- Keep BUY with lower MYR1.16 TP from MYR1.49, 36% upside, c.4% yield. CTOS Digital’s 1H25 core PATAMI of MYR37.1m (-21% YoY) was dragged by slower growth, delay in project recognition, and underperforming investment. Management lowered the multi-year internal growth outlook to provide a new baseline guidance. While the plateauing growth trajectory may keep investors at bay, valuation has reverted to a palatable level. We cut our forecasts and TP accordingly but still like its exposure to the recession-proof credit reporting agency (CRA) sector with strong cash-flow generation.
- Below expectations. 1H25 core PATAMI only made up 30% of our and 35% of Street’s full-year forecasts, dragged by slower consumption from local key accounts and commercial segments with some delays in new projects. It was further undermined by underperforming investments and increase in various marketing and development costs. GPM dipped to 68% (from 73%), mainly due to the lower margin international business and higher costs from earlier product investments. Bottomline impact was cushioned by stronger associates’ profit, recording 43% growth YoY in 1H25 – thanks to much better performances from Juris Technologies (Juris), RAM Holdings (RAM) and Business Online Public Company (BOL). A second interim dividend of 0.65 sen/share is declared, going ex on 25 Sep (2Q24: 0.78 sen).
- 2Q25 revenue for key accounts was down 2% YoY to MYR29.5m, because of high-base from a one-off fee in 2Q24 and slower consumption from local clients, but digital bank volumes accelerated. For the commercial segment, growth in local commercial clients was offset by decline from international clients, following the change in their subscription model. The only bright spot stems from the direct-to-consumer space showing a healthy double-digit growth – driven by the ever-increasing new user base (4.6m now) and good take-up in the newly launched business reports. As a result, PATAMI declined 13.6% YoY in 2Q25 to MYR22.4m.
- Revising down the internal target again. Management revised down its FY25 internal profit target by 27% and guided a sustainable growth trajectory of 10-15% in the future following cost optimisation efforts, discontinuing underperforming investments, and potentially higher growth trajectory from successful new product innovation. CTOS’ associate company Juris remains on a robust growth trajectory and continues to build on its pipeline of projects win. RAM is on course to deliver stronger results in FY25 while the building disposal was completed in Jun 2025 with dividend amounting to RM32m to be received.
- Forecasts. We cut our FY25F-27F earnings by 26.5%, 26.4% and 24%, after factoring in slower growth across all segments and margin assumptions. Our DCF-based TP is now revised down to MYR1.16 (from MYR1.49) – inclusive of a 4% ESG discount. Downside risks: Regulatory environment changes, slower-than-expected topline growth, and data security breaches.
Buy (Maintained)
Lee Meng Horng
+603 2302 8115
lee.meng.horng@rhbgroup.com
Share Performance (%)
| YTD | 1m | 3m | 6m | 12m | |
|---|---|---|---|---|---|
| Absolute | (28.8) | (8.6) | (18.6) | (29.3) | (38.1) |
| Relative | (22.2) | (9.5) | (20.2) | (26.8) | (33.0) |
52-wk Price low/high (MYR): 0.86 – 1.42
Forecasts and Valuation
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Total turnover (MYRm) | 261 | 305 | 324 | 341 | 375 |
| Recurring net profit (MYRm) | 104 | 108 | 89 | 103 | 103 |
| Recurring net profit growth (%) | 22.4 | 3.3 | (17.0) | 15.6 | (0.7) |
| Recurring P/E (x) | 18.98 | 18.38 | 22.15 | 19.16 | 19.31 |
| P/B (x) | 3.3 | 3.2 | 3.0 | 2.9 | 2.8 |
| P/CF (x) | 27.21 | 23.71 | 22.59 | 24.83 | 25.68 |
| Dividend Yield (%) | 3.9 | 3.8 | 3.2 | 3.7 | 3.6 |
| EV/EBITDA (x) | 15.44 | 14.22 | 15.95 | 14.16 | 12.13 |
| Return on average equity (%) | 14.8 | 14.6 | 13.1 | 14.1 | 12.7 |
| Net debt to equity (%) | 22.2 | 23.4 | 17.5 | 14.8 | 12.6 |
Overall ESG Score: 2.8 (out of 4)
E Score: 3.7 (EXCELLENT)
S Score: 3.0 (GOOD)
G Score: 1.0 (POOR)
Please refer to the ESG analysis on the next page
Note: Small cap stocks are defined as companies with a market capitalisation of less than USD0.5bn.
Emissions And ESG
Trend analysis
The energy usage has been on a declining trend in overall Scopes 1 and 2 since 2019. In 2024, CTOS achieved a 18% reduction in Scope 2 emissions. It sets a target to reduce Scope 2 emissions by 15% by 2025 (from 2022 levels), achieve carbon neutrality for Scopes 1 and 2 by 2030 and reduce 15% Scope 3 emissions by 2030.
| Emissions (tCO2e) | Dec-22 | Dec-23 | Dec-24 | Dec-25 |
|---|---|---|---|---|
| Scope 1 | 1 | 1 | – | – |
| Scope 2 | 408 | 371 | 301 | – |
| Scope 3 | 1 | 1 | – | – |
| Total emissions | 409 | 372 | 301 | na |
Latest ESG-Related Developments
CTOS maintained a 4-star rating for the FTSE4Good Bursa Malaysia (FTSE4Good) Index and is a member of FTSE4Good Bursa Malaysia Shariah (F4GBMS) Index. These put it among the companies with leading ESG practices and in compliance with the best practice in terms of disclosure.
CTOS is committed to addressing this issue by reducing greenhouse gas (GHG) emissions through improving operational energy efficiency. By aligning its climate and energy strategies with FTSE and International Financial Reporting Standards (IFRS) standards, it aims to demonstrate responsible corporate stewardship and ensure long-term business growth.
This commitment aligns with the National Energy Transition Roadmap (NETR) aspiration of achieving Net Zero emissions by 2050.
ESG Unbundled
Overall ESG Score: 2.8 (out of 4)
Last Updated: 27 July 2025
E Score: 3.7 (EXCELLENT)
The focus for 2025 will be on strengthening internal environmental initiatives in its workplace. It aims to establish a structured approach to measuring our environmental impact, with a focus on waste generation and water consumption. By setting clear baselines, it will be able to track progress, set realistic targets, and integrate data-driven decision-making into its environmental strategy.
S Score: 3.0 (GOOD)
CTOS promotes an inclusive workplace where individuals – regardless of race, ethnicity, religion, nationality, gender, or ability – are valued for their contributions. It is committed to fairness and equality, continuously refining our human resources practices to promote diversity, ensure equal opportunities, and eliminate discrimination.
G Score: 1.0 (POOR)
CTOS embeds governance, transparency, and accountability into its operations to mitigate financial and legal risks while maintaining stakeholder confidence. It has adequate women directors’ representation on the board. However, its history of RPTs are deemed unfavourable to the governance pillar.
ESG Rating History
The ESG rating for CTOS has remained consistent at 2.8 from July 2023 through July 2025.
Financial Exhibits
Key drivers
- Growth in key accounts ARPU;
- Growth in commercial and direct-to-consumer customers;
- Contributions from associates.
Key risks
- Unfavourable changes in the regulatory environment;
- Slower-than-expected topline growth;
- Data leaks;
- Financial and reputation loss from litigation.
Company Profile
CTOS is the leading credit reporting agency (CRA) in Malaysia. It provides credit information and analytics digital solutions on companies, businesses and consumers for use by banks and businesses at each stage of the customer lifecycle and provides credit information and analysis to consumers.
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Total turnover | 261 | 305 | 324 | 341 | 375 |
| Gross profit | 202 | 221 | 222 | 239 | 261 |
| EBITDA | 99 | 108 | 93 | 103 | 117 |
| Depreciation and amortisation | (10) | (16) | (20) | (18) | (17) |
| Operating profit | 89 | 92 | 74 | 84 | 100 |
| Net interest | (8) | (5) | (4) | (6) | (10) |
| Pre-tax profit | 72 | 95 | 92 | 104 | 120 |
| Taxation | 10 | (7) | (9) | (10) | (32) |
| Reported net profit | 82 | 89 | 83 | 94 | 88 |
| Recurring net profit | 104 | 108 | 89 | 103 | 103 |
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Change in working capital | (14.6) | (12.9) | 12.6 | (4.5) | 0.2 |
| Cash flow from operations | 72.6 | 83.4 | 87.5 | 79.7 | 77.1 |
| Capex | (1.1) | (4.3) | (8.1) | (9.3) | (9.3) |
| Cash flow from investing activities | (10.5) | (17.9) | 6.9 | 5.7 | 5.7 |
| Dividends paid | (45.8) | (72.2) | (62.5) | (72.3) | (71.8) |
| Cash flow from financing activities | (9.0) | (50.0) | (82.5) | (92.3) | (91.8) |
| Cash at beginning of period | 12.4 | 17.3 | 19.4 | 31.2 | 24.3 |
| Net change in cash | 53.1 | 15.4 | 12.0 | (6.9) | (9.0) |
| Ending balance cash | 65.2 | 32.5 | 31.3 | 24.3 | 15.3 |
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Total cash and equivalents | 17 | 19 | 31 | 24 | 16 |
| Tangible fixed assets | 10 | 32 | 27 | 24 | 22 |
| Total investments | 577 | 586 | 606 | 628 | 655 |
| Total assets | 806 | 873 | 900 | 910 | 930 |
| Short-term debt | 49 | 60 | 145 | 125 | 105 |
| Total long-term debt | 101 | 105 | 0 | 0 | 0 |
| Total liabilities | 211 | 251 | 250 | 230 | 218 |
| Total equity | 594 | 623 | 649 | 680 | 711 |
| Total liabilities & equity | 806 | 873 | 900 | 910 | 930 |
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Revenue growth (%) | 34.2 | 16.6 | 6.4 | 5.1 | 10.1 |
| Recurrent EPS growth (%) | 22.3 | 3.2 | (17.0) | 15.6 | (0.8) |
| Gross margin (%) | 77.1 | 72.5 | 68.5 | 70.3 | 69.6 |
| Operating EBITDA margin (%) | 37.9 | 35.4 | 28.7 | 30.1 | 31.1 |
| Net profit margin (%) | 31.4 | 29.1 | 25.7 | 27.6 | 23.5 |
| Dividend payout ratio (%) | 93.7 | 84.8 | 75.0 | 76.8 | 81.4 |
| Capex/sales (%) | 0.4 | 1.4 | 2.5 | 2.7 | 2.5 |
| Interest cover (x) | 11.2 | 16.1 | 16.9 | 12.6 | 10.0 |
Results At a Glance
Figure 1: 1H25 results summary
| FYE Dec (MYRm) | 2Q24 | 1Q25 | 2Q25 | QoQ (%) | YoY (%) | 1H24 | 1H25 | YoY (%) | Comments |
|---|---|---|---|---|---|---|---|---|---|
| Revenue | 76.6 | 76.1 | 79.0 | 3.9 | 3.1 | 148.2 | 155.1 | 4.6 | YoY: Growth in key accounts is mainly driven by contributions from a newly acquired international business and direct-to-consumer channel, offsetting the weakness in local business and SMEs. |
| Key accounts | 39.9 | 38.0 | 39.4 | 3.5 | (1.3) | 118.9 | 150.4 | 26.5 | |
| Commercial | 30.5 | 29.3 | 30.1 | 3.0 | (1.3) | 120.2 | 128.0 | 6.5 | |
| Direct-to-consumers | 6.2 | 8.8 | 9.5 | 8.4 | 52.6 | 22.4 | 26.5 | 18.5 | |
| Cost of sales | (20.4) | (22.7) | (26.2) | (15.6) | (28.6) | (39.6) | (48.9) | (23.7) | Lower margin from international business coupled with higher costs from earlier product investments, which will be discontinued in FY25. |
| Gross profit | 56.2 | 53.4 | 52.8 | (1.1) | (6.2) | 108.7 | 106.1 | (2.3) | |
| Other income/(expenses) | (0.0) | 0.1 | 0.2 | 148.3 | (590.9) | 0.1 | 0.3 | 441.1 | |
| Selling & marketing expenses | (10.1) | (15.4) | (13.7) | 11.1 | (36.1) | (20.5) | (29.1) | (42.4) | YoY: More targeted marketing via digital channels and social media to improve awareness. QoQ: Cost optimisation initiatives. |
| Admin expenses | (19.0) | (19.3) | (19.6) | (1.2) | (3.2) | (35.4) | (38.9) | (9.9) | |
| EBITDA | 27.1 | 18.7 | 19.7 | 5.4 | (27.5) | 52.8 | 38.4 | (27.4) | |
| Depreciation & amortisation | (3.7) | (4.4) | (3.2) | 28.5 | 14.6 | (6.9) | (7.6) | (10.3) | |
| Interest income | 0.0 | 0.1 | 0.1 | 31.7 | 69.4 | 0.1 | 0.1 | 27.0 | |
| Operating profit/EBIT | 23.5 | 14.3 | 16.6 | 15.9 | (29.3) | 46.1 | 31.0 | (32.8) | |
| Finance cost | (2.7) | (2.6) | (2.6) | 0.2 | 5.7 | (4.9) | (5.2) | (6.3) | |
| Share of associates’ profits | 6.4 | 2.8 | 8.9 | 221.5 | 39.5 | 8.2 | 11.7 | 42.6 | YoY & QoQ: Higher contribution from Juris and RAM, offsetting the slower performance from Experian. |
| Profit before tax | 27.2 | 14.5 | 22.9 | 58.0 | (15.5) | 49.4 | 37.4750 | (24.2) | |
| Tax expenses | (1.8) | (0.2) | (1.9) | (691.5) | (5.0) | (3.4) | (2.1) | 37.8 | QoQ: higher tax expenses due to higher profit contribution from Basis. |
| ETR (%) | 6.6 | 1.6 | 8.1 | 6.8 | 5.6 | ||||
| PAT | 25.4 | 14.3 | 21.1 | 47.5 | (16.9) | 46.0 | 35.4 | (23.2) | |
| Non-controlling interest | 0.1 | 0.2 | 0.1 | 0.3 | 0.2 | ||||
| PATAMI | 25.5 | 14.4 | 21.2 | 46.5 | (17.0) | 46.3 | 35.6 | (23.1) | |
| EI | 0.5 | 0.2 | 1.3 | 0.9 | 1.5 | FV gains, and unrealised FX gains/losses. | |||
| Core PATAMI | 26.0 | 14.7 | 22.4 | 53.0 | (13.6) | 47.2 | 37.1 | (21.4) |
Key metrics
| 73.4 | 70.2 | 66.8 | 73.3 | 68.4 | ||
|---|---|---|---|---|---|---|
| Gross profit margin | 35.4 | 24.6 | 24.9 | 35.6 | 24.7 | |
| EBITDA margin | 30.7 | 18.8 | 21.0 | 31.1 | 20.0 | |
| EBIT margin | 35.4 | 19.1 | 29.0 | 33.3 | 24.2 | |
| PBT margin | 33.3 | 19.0 | 26.8 | 31.3 | 23.0 | |
| Net margin | 33.9 | 19.3 | 28.4 | 31.9 | 23.9 |
Valuation
Figure 2: DCF valuation (simplified)
| DCF workings | 2026F | 2027F | 2028F | 2029F | 2030F | 2031F | 2032F | 2033F | 2034F | 2035F |
|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 340.75 | 375.14 | 412.65 | 453.92 | 499.31 | 545.08 | 590.50 | 634.79 | 677.11 | 716.61 |
| EBIT margin (%) | 25.0% | 26.7% | 26.7% | 26.7% | 26.7% | 28.1% | 29.5% | 30.8% | 32.2% | 33.6% |
| EBIT | 85.09 | 100.16 | 110.17 | 121.19 | 133.31 | 153.07 | 174.00 | 195.83 | 218.25 | 240.90 |
| Tax rate (%) | 9.0% | 24.0% | 24.0% | 24.0% | 24.0% | 24.0% | 24.0% | 24.0% | 24.0% | 24.0% |
| EBIT (1-t) | 77.43 | 76.12 | 83.73 | 92.11 | 101.32 | 116.33 | 132.24 | 148.83 | 165.87 | 183.08 |
| Depreciation & amortisation | 18.05 | 16.91 | 18.60 | 20.46 | 22.51 | 24.57 | 11.15 | 11.57 | 11.96 | 12.31 |
| CAPEX | (9.31) | (9.31) | (9.78) | (10.26) | (10.78) | (11.27) | (11.74) | (12.18) | (12.59) | (12.95) |
| Working capital | (4.53) | 0.23 | 0.26 | 0.28 | 0.31 | 0.33 | 0.34 | 0.35 | 0.36 | 0.37 |
| Free cash flow to firm | 81.64 | 83.96 | 92.82 | 102.59 | 113.36 | 129.96 | 131.99 | 148.57 | 165.61 | 182.81 |
| Cost of capital | 7.4% | 7.4% | 7.4% | 7.4% | 7.4% | 8.4% | 8.4% | 8.4% | 8.4% | 8.4% |
| Cumulated discount factor | 1.07 | 1.15 | 1.24 | 1.33 | 1.43 | 1.62 | 1.76 | 1.91 | 2.07 | 2.25 |
| PV of FCFF | 76.00 | 72.76 | 74.88 | 77.05 | 79.26 | 79.99 | 74.92 | 77.78 | 79.96 | 81.41 |
| PV of forecast FCFF | 149 |
| PV of new verticals FCFF | 231 |
| PV of transition FCFF | 476 |
| PV of terminal value | 1,303 |
| Cumulative PV of FCFF | 2,159 |
| Net cash/(debt) | (146) |
| Minority interest | 0.5 |
| Equity value | 2,014 |
| Associate stakes | 783 |
| Total equity value | 2,797 |
| ESG discount | 4% |
| TP (MYR/share) | 1.13 |
| 2025-30F | ≥2031F | |
|---|---|---|
| WACC | 7.42 | 8.43 |
| Cost of debt (1-t) | 4.92 | 4.92 |
| Cost of equity | 7.86 | 8.43 |
| Rf | 4.00 | 4.00 |
| Rm | 6.67 | 6.67 |
| Beta | 1.13 | 1.13 |
| Risk adjustment | 0.75 | 1.25 |
Recommendation Chart
| Date | Recommendation | Target Price | Price |
|---|---|---|---|
| 2025-04-27 | Buy | 1.49 | 1.05 |
| 2025-02-25 | Buy | 1.49 | 1.16 |
| 2024-11-12 | Buy | 1.58 | 1.22 |
| 2024-08-02 | Buy | 1.73 | 1.37 |
| 2024-07-10 | Buy | 1.84 | 1.45 |
| 2024-03-13 | Buy | 1.77 | 1.28 |
| 2024-02-02 | Buy | 1.93 | 1.48 |
| 2023-10-30 | Buy | 1.89 | 1.45 |
| 2023-08-28 | Buy | 1.89 | 1.38 |
| 2023-04-18 | Buy | 1.92 | 1.28 |
| 2023-02-02 | Buy | 1.92 | 1.46 |
| 2022-10-28 | Buy | 1.92 | 1.40 |
| 2022-06-22 | Buy | 2.22 | 1.23 |
| 2022-04-24 | Buy | 2.36 | 1.52 |
| 2022-01-24 | Buy | 2.40 | 1.74 |
RHB Guide to Investment Ratings
Buy: Share price may exceed 10% over the next 12 months
Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain
Neutral: Share price may fall within the range of +/- 10% over the next 12 months
Take Profit: Target price has been attained. Look to accumulate at lower levels
Sell: Share price may fall by more than 10% over the next 12 months
Not Rated: Stock is not within regular research coverage
Investment Research Disclaimers
This report does not purport to be comprehensive or to contain all the information that a prospective investor may need in order to make an investment decision. The recipient of this report is making its own independent assessment and decisions regarding any securities or financial instruments referenced herein. Any investment discussed or recommended in this report may be unsuitable for an investor depending on the investor’s specific investment objectives and financial position. The material in this report is general information intended for recipients who understand the risks of investing in financial instruments. This report does not take into account whether an investment or course of action and any associated risks are suitable for the recipient. Any recommendations contained in this report must therefore not be relied upon as investment advice based on the recipient’s personal circumstances. Investors should make their own independent evaluation of the information contained herein, consider their own investment objective, financial situation and particular needs and seek their own financial, business, legal, tax and other advice regarding the appropriateness of investing in any securities or the investment strategies discussed or recommended in this report.
This report may contain forward-looking statements which are often but not always identified by the use of words such as “believe”, “estimate”, “intend” and “expect” and statements that an event or result “may”, “will” or “might” occur or be achieved and other similar expressions. Such forward-looking statements are based on assumptions made and information currently available to RHB and are subject to known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievement to be materially different from any future results, performance or achievement, expressed or implied by such forward-looking statements. Caution should be taken with respect to such statements and recipients of this report should not place undue reliance on any such forward-looking statements. RHB expressly disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or circumstances after the date of this publication or to reflect the occurrence of unanticipated events.
Analyst Certification
The analyst(s) who prepared this report, and their associates hereby, certify that: (1) they do not have any financial interest in the securities or other capital market products of the subject companies mentioned in this report, except for:
| Analyst | Company |
|---|---|
(2) no part of his or her compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.
