Latest news with #CTOS
The Star
6 days ago
- Business
- The Star
CTOS focuses on cost cuts, Asean expansion
PETALING JAYA: Credit reporting company CTOS Digital Bhd is expected to continue optimising its cost structure while at the same time focusing on exiting less profitable businesses and expanding its Asean footprint, analysts say. The company's second quarter of financial year 2025 (2Q25) results released last Friday came in below market expectations. However, most analysts believe the worst may be over in terms of share price valuation given the decline year-to-date, the more conservative financial estimates made by the company's management following its 2Q25 results, and the ongoing growth in its Asean customer base, as well as the offering of new products. RHB Research has cut earnings assumptions for CTOS for this year to 2027 by 26.5%, 26.4% and 24%, respectively, after factoring in slower growth across all segments and margin assumptions. While maintaining a 'buy' call on the stock, the research house revised its target price to RM1.16 from RM1.49. 'Management has lowered its multi-year internal growth outlook to provide a new baseline guidance. 'While the plateauing growth trajectory may keep investors at bay, its valuation has reverted to a palatable level,' RHB Research said. Hong Leong Investment Bank (HLIB) Research said that despite 2Q25 results coming in below market expectations, the decline in share price means that the stock's risk-reward profile has become more balanced. 'Overall, we are still optimistic that Asean continues to be an under-penetrated market, and CTOS is well-positioned to capitalise on the region's compelling growth potential,' the research house said. 'Broadly, management is focused on phasing out less profitable products and optimising costs in order to restore gross profit margins back to the 70% range from the current 67%. 'Furthermore, CTOS aims to deepen its penetration into the large corporate segment, an area where it is lagging,' HLIB Research said. The research house retained a 'hold' call on the stock with the target price lowered to 89 sen from RM1.10. Maybank Investment Bank Research (Maybank IB) also revised the company's 2025 to 2027 earnings down by between 27% and 31% to reflect the weaker-than-expected margins and muted earnings visibility. The research house also downgraded the rating for CTOS to a 'hold' from a 'buy' and lowered the target price to 92 sen from RM1.30. Maybank IB said there could be a rerating potential after 2026 as cost rationalisation efforts and client wins should drive growth. It added that the search for a new chief executive officer 'is ongoing, with a candidate currently in the final stages of evaluation'. It said the company's management has guided for a 27% cut in this year's earnings. CIMB Research, which downgraded the stock to a 'hold' from a 'buy', has lowered its target price on CTOS to 90 sen from RM1.30. The research house said the valuation was also based on the company's sluggish earnings growth outlook and the structural shift in its earnings profile in view of the unfavourable sales mix weighted towards lower-margin products and a higher tax rate beyond October 2026. CTOS's pioneer tax status is set to expire in November 2026.
Focus Malaysia
28-07-2025
- Business
- Focus Malaysia
CTOS earnings fall short amid slower key account revenues, higher costs
CTOS's first half of financial year 2025 (1HFY25) core net profit of RM36.8 mil only made up 35% of Kenanga's full-year forecast and 33% of consensus full year estimate. The negative deviation was due to slower-than-expected revenues from Key Accounts and investment costs dragging gross profit margins. This is also CTOS's third earnings cut for its FY25 guidance. CTOS highlights favourable progress has been made regarding the hiring of a new CEO, which it is hopeful to announce by quarter four of calendar year 2025 (4QCY25). Year-on-year (YoY), 1HFY25 revenue grew by 5% on the back of strong demand for digital products by CTOS's Key Account segment. However, this was offset by fewer comprehensive portfolio reviews. Operating profit declined by 33% as margin came off to 19.9% as cost of sales increased from lower margined international business alongside investment costs for new products which have yet to scale. All in, excluding one-off rightsizing and shares-based expenses, this brought 1HFY25 normalised profit to RM36.8 mil (-22%). Quarter-on-quarter (QoQ), 2QFY25 net profit surged by 49%, mostly due to stronger associate contributions (+222%) from better project flows by Juristech. CTOS's revenue streams remain in demand as the group boosts customer acquisition efforts across its key segments. The group continues to grow its Key Accounts clientele and is working to develop a range of higher margin offerings to bolster profits. Its commercial offerings may soon introduce value propositions concerning the digital fraud prevention space. With regards to expenses, the group indicates that the higher investment costs incurred would dissipate by FY25. At the meantime, its ongoing operational rightsizing exercise is anticipated to translate to cost savings of RM10 mil/year, to be completed by 4QFY25. This leans towards a better cost environment for FY26. Still, as the group realigns its operations, it does not discount top line headwinds to spill over into FY26, which we opine could arise from customers lowering their frequency of use of CTOS's products and solutions amid softening economic conditions in the near term. With regards to FY27F's absence of tax incentives, we project for the year's net profit to come in flattish from FY26F revised net profit of RM102 mil. This is based on a 10% growth assumption to top line with margins remaining constant. Kenanga downgrades CTOS to market perform. The group's earnings shortfall may be a short-term conundrum as its long-term prospects could ride from an enlarged suite of products and eventual revitalisation of economic activity. However, we note that the reversion to standard tax rates would also undermine its earnings accretion, which hampers a longer-term view with regards to dividend prospects. —July 28, 2025 Main image: CTOS
New Straits Times
28-07-2025
- Business
- New Straits Times
CTOS' latest interim results fall short as firm lowers FY2025 revenue guidance
KUALA LUMPUR: CTOS Digital Bhd's first half of 2025 (1H25) results fell short of expectations due to the pressure from a weaker gross margin in the second quarter due to an unfavourable sales mix, said CIMB Securities. The results reached just 35 per cent of CIMB Securities's and 33 per cent of consensus full-year forecasts. "CTOS declared a second interim dividend per share (DPS) of 0.65 sen, bringing 1H25 DPS to 1.09 sen - below our expectations. "Meanwhile, net profit declined 22.4 per cent year on year (YoY) to RM36.7 million in 1H25, weighed down by the less-favourable sales mix and higher operating costs," it said in a note. CIMB Securities said CTOS had lowered its financial year 2025 (FY25) revenue guidance to RM320 million from RM352 million and its FY25 net profit forecast to RM87.5 million from RM120.5 million at the mid-point. This implies a 19 per cent YoY decline in net profit in FY25F, down from the previously guided 11 per cent growth. "The downgrade reflects delays in project conversion due to extended sales cycles, a strategic shift to exit low-yielding projects, and a change in several customers' spending patterns. "While ongoing cost optimisation efforts should support a rebound in 2H25, earnings are still expected to remain below 2H24 levels," it said. CIMB Securities cut its FY25 to FY27 earning per share (EPS) estimates by 24–32 per cent to reflect a less-favourable sales mix. This is due to slower conversion in the higher-margin key account and commercial segments, as well as higher tax expenses starting FY26. "CTOS' pioneer tax status is set to expire in November 2026, which may lead to higher effective tax rates in FY27. We now forecast a 26 per cent YoY net profit decline in FY25, followed by a recovery to 13 per cent growth in FY26. "With the downward revisions to our earnings forecasts, we downgrade the stock to Hold from Buy with a lower target price of 90 sen," it added.
Yahoo
27-07-2025
- Business
- Yahoo
CTOS Digital Berhad Second Quarter 2025 Earnings: EPS: RM0.009 (vs RM0.011 in 2Q 2024)
CTOS Digital Berhad (KLSE:CTOS) Second Quarter 2025 Results Key Financial Results Revenue: RM79.0m (up 3.1% from 2Q 2024). Net income: RM21.2m (down 17% from 2Q 2024). Profit margin: 27% (down from 33% in 2Q 2024). The decrease in margin was driven by higher expenses. EPS: RM0.009 (down from RM0.011 in 2Q 2024). AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. All figures shown in the chart above are for the trailing 12 month (TTM) period CTOS Digital Berhad Earnings Insights Looking ahead, revenue is forecast to grow 11% p.a. on average during the next 3 years, compared to a 8.3% growth forecast for the Professional Services industry in Asia. Performance of the market in Malaysia. The company's shares are down 6.6% from a week ago. Risk Analysis You still need to take note of risks, for example - CTOS Digital Berhad has 1 warning sign we think you should be aware of. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
New Straits Times
25-07-2025
- Business
- New Straits Times
CTOS' Q2 earnings drop 17pct to RM21.61mil, revenue rises
KUALA LUMPUR: CTOS Digital Bhd's net profit fell 17 per cent to RM21.16 million in the second quarter of June 30, 2025 (2Q25) from RM25.5 million a year ago. Its quarterly revenue, however, increased to RM79 million from RM76.64 million previously, driven by stronger contributions from the key accounts, commercial and direct-to-consumer segments. CTOS' earnings per share of fell to 0.90 sen from 1.10 sen in 2Q24. In the first half of the year ended June 30, 2025 (1H25), CTOS registered a lower net profit of RM35.6 million from RM46.32 million a year ago, while revenue rose to RM155.07 million from RM148.22 million. The company declared a second interim single-tier dividend of 0.65 sen per ordinary share in respect of the three-month period ended June 30, 2025, which will be paid on Oct 24, 2025. This translates to a payout ratio of 71 per cent for the quarter, while the entitlement date for the dividend payment is Sept 26, 2025. CTOS interim group chief executive officer Kevin Loh said it continues to see positive revenue growth as it intensifies efforts to deepen market penetration both in Malaysia and across the region. "In 1H25, we undertook a series of initiatives across the company to optimise our cost structure and deploy resources more effectively. "These initiatives form part of our broader strategy to enhance operational efficiency and strengthen our foundation for sustainable long-term growth," he added. Loh said the company has made meaningful progress in product innovation, with several new solutions launched to address the evolving needs of its clients. "Our associate companies are also performing well. Notably, JurisTech continues to gain strong traction, supported by a growing orderbook and an expanding regional presence," he added.
