Solid Optimism On CTOS After Court Verdict

CTOS Digital has been upgraded to OUTPERFORM by Kenanga Investment Bank, following a successful appeal that overturned a previous High Court ruling. The verdict, reached in the Court of Appeal, has eliminated legal uncertainties regarding CTOS’s authority to formulate credit scores under the Credit Reporting Agencies Act 2010.

Previously, the High Court ruling had cast doubt on CTOS’s ability to legally operate in its core business of credit reporting, leading to an UNDERPERFORM rating. However, with the appellate court’s decision, Kenanga has revised its recommendation to OUTPERFORM, citing reduced business risk and reinstating its target price to RM2.00 from RM1.15.

Kenanga said its confidence in CTOS’s prospects was bolstered by the clarity provided by the Court of Appeal’s decision, which affirms CTOS’s operational framework under existing legislation. This legal affirmation is expected to restore investor confidence and drive potential upside as market uncertainties dissipate.

The bank maintains its earnings forecasts unchanged, reflecting stability and continuity in CTOS’s business operations post-appeal. The revised DCF-driven target price of RM2.00 accounts for reduced risk premiums and incorporates a 4-star ESG rating, reflecting improved market sentiment and strategic clarity.

With CTOS now positioned to operate without legal encumbrances, Kenanga highlights the company’s dominant market share in credit reporting, estimated at approximately 80% domestically. This strong market position, combined with synergistic opportunities and scalable operations, underscores CTOS’s potential for sustained growth and regional expansion.

Investors looking for opportunities in the digital and financial sectors may find CTOS Digital an attractive prospect, given its strengthened legal standing and strategic advantages in the credit reporting industry. The revised OUTPERFORM rating and increased target price indicate Kenanga’s positive outlook on CTOS’s ability to capitalise on its core strengths and drive shareholder value in the foreseeable future.

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