CTOS Digital Berhad (CTOS, 5301), Malaysia's leading credit information services company, recently released outstanding quarterly results, with both revenue and profits reaching new highs. Without further delay, let's delve into CTOS's latest performance and explore the factors behind their impressive performance.

Revenue Comparison (YoY +25.73%, QoQ +6.76%)

For the third quarter ending on September 30, the company reported approximately RM66.45 million in revenue, marking a substantial increase of around 25.73% compared to the same period last year when it was RM52.85 million. This growth can be attributed to strong demand from customer groups, namely Key Accounts, Commercial, and Direct-to-Consumer, for CTOS Data Systems Reports, digital solutions, and comprehensive portfolio review and analytics services.

Out of the RM66.45 million in revenue, approximately RM30.94 million came from Commercial customers, representing an increase of around 7.91% compared to the previous year. Next, about RM29.69 million was generated from Key Accounts, showing an impressive year-over-year growth of approximately 47.19%. The remaining revenue of around RM5.82 came from Direct-to-Consumer, also experiencing a significant year-over-year increase of approximately 46.59%.

In terms of product services, the company's CTOS Data Systems Reports contributed approximately RM28.38 million in revenue for this quarter. Subsequently, subscription and monitoring services accounted for approximately RM23.59 million. Comprehensive portfolio review and analytics services contributed approximately RM7.68 million and RM6.80 million, respectively.

Similarly, compared to the previous quarter, the company's revenue increased by approximately RM4.21 million, or 6.76%.

Net Profit Comparison (YoY +7.16%, QoQ +15.42%)

Driven by strong revenue, the company achieved a net profit of approximately RM24.39 million for this quarter, representing year-over-year and quarter-over-quarter increases of approximately 7.16% and 15.42%, respectively. This growth was also attributable to an increase in the share of profits from associates.

It's worth noting that the company remains a net cash company, holding approximately RM13.58 million in cash and cash equivalents.

Additionally, in this quarter, CTOS announced the distribution of a third interim dividend of RM0.0064, with an ex-dividend date of November 23 and a payment date to shareholders on December 22, 2023.

Outlook

The company anticipates engaging with nearly 15 million credit-active Malaysian consumers through financial education, digital marketing, and strategic partnerships. Additionally, the recent expansion into Indonesia and the Philippines offers significant growth potential.

Moreover, CTOS has been granted a five-year tax exemption by the Ministry of Finance, which is effective from November 9, 2021, to November 8, 2026, resulting in a reversal of approximately RM27.80 million in tax provisions.

In conclusion, the management remains optimistic about the company's future growth prospects. As for readers, what are your thoughts on CTOS, with a current P/E ratio of approximately 44.17 times?

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Disclaimer: The above is purely for educational purposes and reflects personal opinions. It does not constitute any buying or selling recommendations.

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