CTOS Digital posts record-breaking earnings for FY2023 as 4Q profit jumps four-fold

KUALA LUMPUR (Jan 31): CTOS Digital Bhd saw its net profit surge four-fold to RM56.28 million for the fourth quarter ended Dec 31, 2023 (4QFY2023), from RM14 million in the previous year’s corresponding quarter, largely due to the recognition of a tax credit, and higher revenue.

This is the credit reporting agency’s highest quarterly earnings since its listing on the Main Market of Bursa Malaysia in July 2021.

Revenue for the quarter jumped 38.69% to RM73.15 million from RM52.74 million in 4QFY2022, its bourse filing on Wednesday showed.

The group recorded a tax credit of RM26.03 million for 4QFY2023, versus a tax expense of RM4.71 million a year ago, due to the overprovision of prior year taxes after the group’s wholly owned unit CTOS Data Systems Sdn Bhd (CDS) secured another five-year extension of tax exemption from the Ministry of Finance, effective Nov 9, 2021 to Nov 8, 2026.

CTOS declared a fourth interim dividend of 1.706 sen per share — payable on March 27 — raising its total dividend for the financial year ended Dec 31, 2023 (FY2023) to 3.329 sen per share, versus 1.88 for FY2022.

With the jump in its 4QFY2023 profit, CTOS achieved a record-breaking net profit of RM118.37 million for FY2023, up 65.05% from FY2022’s RM71.72 million, while revenue grew 34.22% to RM261.44 million from RM194.78 million.

The revenue increase was mainly driven by its Malaysian operations, with revenue rising across all three of its customer groups, namely key accounts, commercial and direct-to-consumer.

Looking ahead, CTOS said it expects strong growth in its key accounts segment, fuelled by the rising adoption of digital solutions and in-depth analytical insights, compounded by organic growth from core businesses.

In the commercial segment, CTOS said growth is anticipated from the activation of new accounts and increased consumption of products and solutions, with small, medium and enterprises (SMEs) noticeably leaning on the group’s tools for smooth customer onboarding and credit checks.

As for its direct-to-consumer business, the group is targeting engagement with nearly 15 million credit-active Malaysian consumers through financial literacy drives, digital marketing and strategic partnerships.

“Our recent Asean expansion via acquisitions in Indonesia and the Philippines offers significant growth potential; the plan is to blend our expertise with theirs, presenting a top-tier range of credit-centric solutions,” the group said, adding that its investments in Malaysia and Asean focus on identifying and nurturing synergistic opportunities.

“We are confident that our associate companies will consistently align with and achieve the expectations set for them. However, while our projections and preparations are robust, it is essential to acknowledge the existence of uncertainties in both the domestic and global markets. The group is not immune to these unpredictable elements but remains equipped with pre-emptive measures to navigate potential challenges,” CTOS added.

CTOS shares closed unchanged at RM1.41 on Wednesday, giving the group a market capitalisation of RM3.26 billion.