Temporary suspension to CCRIS access
A temporary setback action
The suspension of access to CCRIS is merely a precautionary exercise by BNM, and we expect the service to resume once CRAs have re-evaluated the integrity of their data systems. CTOS maintains a robust data security system, we believe, and while this is a temporary setback, we expect minimal financial impact to the group. We maintain a BUY call on the stock with an unchanged TP of MYR2.17, based on FY22E 2.6x target PEG, in-line with the median of its global peers’ basket.
A precautionary measure
CTOS has announced that BNM has issued a letter/directive to all Credit Reporting Agencies (CRAs), of a temporary suspension of access to the central bank’s Central Credit Reference Information System (CCRIS), with effect form 1 Oct 2021. This, as we understand, is just a precautionary measure taken by BNM in light of recent press reports of alleged data leakages at Government agencies. We understand that access to CCRIS will be restored once the CRAs have had the opportunity to re-evaluate the integrity of their data security systems. CTOS says it will momentarily halt reports and services containing CCRIS information on its platform.
Maintains a robust data security system
Upholding customer data security remains a key priority at CTOS. Apart from constant monitoring, it conducts quarterly internal data leakage prevention reviews, and is subject to annual external IT audits to ensure compliance with BNM’s RMiT requirements. There are no reported cases of data security compromise at CTOS in the past that we are aware of.
Minimal financial impact expected
CTOS does not profit from CCRIS data, which are currently provided free to consumers. It does, however, bundle the CCRIS data into, among others, its own CTOS credit reports, which are then sold to customers. The sale of reports amounted to MYR27m in 1H21 and accounted for 36% of revenue. If we hypothetically assume a 1-month revenue loss of about MYR4.6m from report sales, the impact to our FY21 net profit forecast would be minimal at about 5%. Thus, we maintain our FY21-23E forecast, valuation multiple and TP unchanged for now.