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Credit scoring revenue is only 13 to 15% of CTOS business. Yesterday big reaction is overdone. The price recovery from its low yesterday have spoken itself.
We have Kenangan responses yesterday with target price reduced to 1.15. Today we have Maybank responses as : Regulatory rsks appear contained; U/G to BUY
We come away from CTOS’ analyst briefing ystd feeling positive that its
business continuity is not at risk following the KL High Court decision on
11 March to rule in favour of the plaintiff. Despite share price undergoing
a steep 14% correction ystd, we believe regulatory risks to its business at
this juncture are contained. As such, we upgrade CTOS to a BUY. We
maintain our FY24-26E forecasts and TP of MYR2.10 (pegged to 1.9x PEG).
Business continuity uncertainties seem overdone
As part of the judgment summary, the High Court judge had stated that
Credit Rating Agencies (CRAs) were not legally empowered to formulate
credit scores. However, in its ruling, the court did not bar or injunct CTOS
Data Systems from providing credit scores. We take comfort in mgmt’s
comments post-discussion with their legal counsel that despite the legality
of CTOS’ business continuity being called into question as part of the
judge’s comments, it may not be used as precedent in future litigation.
Licensed to provide credit scoring services
Mgmt reminded that they are licensed by regulators (CRAA, BNM) to
provide credit-related services, including the provision of credit scores.
They believe their SOP is fit and proper as it is subject to annual audits
and regular re-evaluation processes by the regulators.
Defamation lawsuit to undergo due process at CoA
While we make no comment on the defamation suit that is undergoing due
legal process at the Court of Appeal (first hearing is likely to take between
3-6 mths), it is our opinion that the answers provided by mgmt in relation
to its business continuity were satisfactory. Defamation suits are not
atypical in the CRA industry, with the company having received 12
favourable rulings in such cases since 2014. We also note the company has
5 ongoing lawsuits currently undergoing due legal process in the courts.
I dont want become lousy share guru like kevin Tam. You all not dare buy FFB I buy, you all not dare buy CTOS I buy. Here only choon is smart guy. buy when other panic sell.
Sze Chia Lok, if u r new n want to learn more , ACW is quite good but new guys don’t go to try call warrants unless u can take high risk .. For ppl like Ho Patric n others like to talk bad ACW n so on , they just too free n don’t have points to talk about …:)
