PETALING JAYA: Despite the uncertainties surrounding CTOS Digital Bhd , some analysts remain positive on its prospects.
Citing a potential favourable outcome in the credit reporting agency’s (CRA) appeal against a recent High Court decision, some brokerages are maintaining their earnings forecasts for the company, and advocating “buy” on the counter.
According to RHB Research, the recent selldown in CTOS shares has been overdone, and hence, now provides an opportunity to accumulate shares in a leading CRA with a “recession–proof business and growth avenues in the digitalisation age”.
Even so, the brokerage acknowledged that the risk premium on CTOS had increased.
RHB Research kept its “buy” call on CTOS, but lowered its target price for the counter to RM1.77 from RM1.93 previously.
“Management clarified certain aspects of the recent legal judgement against the company.
“It confirmed the absence of an injunction that allows CTOS to continue operating, as well as the legality on formulating credit scores,” RHB Research reported, following a conference call with the company.
It said the management guided further clarification was done with the Registrar Office of Credit Reporting Agencies and Bank Negara to confirm that CTOS is allowed and licensed to provide credit-related products under CRA 2010.
Hong Leong Investment Bank Research maintained its “buy” call on CTOS, with a lower target price of RM1.45, as compared with RM1.75 previously.
Meanwhile, Maybank Investment Bank Research downgraded CTOS to a “hold” from a “buy” previously, with an unchanged target price of RM2.10.
Maintaining a cautious view, Kenanga Research argued that until it is overturned, the High Court’s interpretation still posed a challenge to CTOS’ business model, noting the appeal process could take between three and six months,
It kept its “underperform” call on CTOS, with an unchanged target price of RM1.15.