Recently, CTOS Digital Berhad (CTOS, 5301), the only listed credit information service company in Malaysia, announced outstanding quarterly performance, indicating a continuous surge in revenue and net profit. Without further delay, let's delve into the recently disclosed results from CTOS.

Revenue Comparison (YoY +38.69%, QoQ +10.08%)

For the fourth quarter ending on December 31, 2023, the company's revenue reached approximately RM73.15 million, showing a substantial increase of about 38.69% compared to the same period last year (RM52.74 million). This revenue growth is primarily attributed to strong demand for CTOS Data Systems Reports, digital solutions, and comprehensive portfolio review and analytics services.

Breaking down the RM73.15 million revenue, approximately RM35.79 million came from Key Accounts, reflecting a YoY increase of approximately 67.84%. Following that, about RM31.79 million came from Commercial clients, representing a YoY increase of approximately 16.48%. The remaining revenue of approximately RM5.56 million originated from Direct-to-Customer, showing a YoY increase of around 34.95%.

In terms of business segments, CTOS Digital Reports contributed around RM33.57 million in revenue for the quarter, followed by subscription and monitoring services at approximately RM23.57 million. Comprehensive portfolio review and analysis, as well as digital solution services, contributed approximately RM9.23 million and RM6.76 million, respectively.

Compared to the previous quarter, the company's revenue increased by approximately RM6.69 million or 10.08%.

Overall, CTOS achieved a total revenue of approximately RM261.43 million in the fiscal year 2023, representing a growth of about 34.21% compared to the fiscal year 2022. Notably, the Indonesian company PT Prime Analytics and the Philippine company Finscore Inc., acquired by CTOS in August of the previous year, contributed RM5.96 million in revenue for the full fiscal year 2023.

Net Profit Comparison (YoY +301.87%, QoQ +130.78%)

Given the overall robust business income, the company realized a net profit of approximately RM56.27 million for the quarter, showcasing a significant YoY increase of around 301.87%.

In addition to strong business income, the company actually recorded approximately RM26.03 million in tax credits in this quarter. This was a result of the company obtaining a second five-year tax exemption, offsetting or adjusting previously recognized taxes in financial statements, thereby boosting the company's profits.

Similarly, compared to the previous quarter, the net profit increased significantly by approximately RM31.89 million or 130.78%. However, the pre-tax profit slightly decreased by about 0.87% QoQ to approximately RM30.15 million, attributed to increased operating expenses, particularly in employee costs and IT-related expenses.

In summary, CTOS achieved a net profit of approximately RM118.37 million for the full fiscal year 2023, reflecting a growth of about 65.06% compared to the net profit of approximately RM71.71 million in the fiscal year 2022.

The company also announced the distribution of a fourth interim dividend of RM0.0170 for this quarter, with an ex-dividend date on February 27 and payment scheduled for March 27, 2024. It is worth mentioning that the dividend yield for this fiscal year is a remarkable 70.00%, surpassing its dividend policy rate of 60.00%.

Outlook

With the introduction of more digital-centric financial products in the market, the demand for credit scoring services is expected to rise rapidly. CTOS's expansion into Indonesia and the Philippines also provides significant growth potential for the company.

In conclusion, the management remains positive about the company's future prospects. So, dear readers, what are your thoughts on CTOS, with a current P/E ratio of approximately 28.88 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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