Censof Holdings provides an extensive portfolio of financial management software solutions that cater to start-ups, small and medium enterprises (SMEs) as well as large corporations. Leveraging from the government’s support via MyDigital Blueprint initiative, Censof will continue to strive into adopting new technologies to further enhance its operational performance. We expect Censof to register net earnings of RM18.1m and RM20.5m for FY3/23 and FY3/24 respectively driven by improving demand in all its business segment and recurring incomes. BUY with a target price of RM0.52 based on 15x PER over FY23 EPS.

Censof’s core businesses are categorised into 4 main segments, namely (i) Financial Management Solutions Government (FMS-G);(ii) Financial Management Solutions Commercial & SME (FMS-C & SME); (iii) Wealth Management Solutions (WMS); and (iv) Digital Technology.

FMS-G is the key revenue and earnings contributor for Censof contributing 72% of the group’s revenue and 67% of PBT. Censof is the leading provider of financial management solutions developed on Standard Accounting System for Government Agencies (SAGA) compliant standard serving 90 Government Agencies. The FMS-G segment enjoys a RM42m recurring maintenance revenue.

The FMS-C division provides accounting software for SMEs, namely ABSS (formerly known as MYOB) with a client base of more than 400k in Malaysia, Singapore, Hong Kong and others with annual recurring income of RM15m. FMS-C also provide a wide range of business solutions such as ERP, CRM, Payroll, Mobile apps etc to 60 commercial clients in Malaysia and Singapore. The business solutions services have recurring revenue of RM2.1m.

Censof has a Project basis order book of RM45m and Maintenance order book of RM40.7m as of 30 April 2022 which provide great earnings visibility for the next 2 years. Meanwhile balance sheet is strong with net cash of RM17.1m as at FY3/22.

Source: Rakuten Research - 30 Jun 2022