Steady growth
1H22 PATMI of S$4m (+2% yoy) was in line with our expectations. CBA declared an interim DPS of 1.7Scts in 1H22, representing a 98% payout ratio.
Growth was steady across both FI and non-FI segments. Contributions from Cambodia picked up, but the political situation in Myanmar remains a hurdle.
Reiterate Add. The commencement (and growth) of digital banks in Singapore should support stronger credit info demand and is a key catalyst.
1H22 revenue driven by steady growth across the board
Credit Bureau Asia’s (CBA) 1H22 PATMI of S$4m (+2% yoy) was in line, forming 47% of our full-year estimate. While steady business growth across all segments drove 1H22 revenue higher by 5% yoy, this was partially offset by lower non-operating income (-46% yoy), from less government grants received, and higher opex (+9% yoy), on an increase in headcount to fulfill operational and compliance requirements and salary adjustments. CBA declared an interim DPS of 1.7Scts for 1H22 (1H21: 1.7Scts), implying a 98% dividend payout ratio — ahead of management’s c.90% guidance.
More frequent reviews and compliance needed to support 2H22F
Revenue from CBA’s financial institution (FI) data business rose 7% yoy, driven by both an increase in the number of bulk review reports (as FIs increase the frequency of periodic reviews), as well as a rise in new credit application reports (as consumer credit growth picks up). Meanwhile, revenue from its non-FI data business increased 4% yoy, as higher demand from increased compliance and risk management requirements by overseas customers (+10% yoy) were dampened slightly by fewer Singapore Commercial Credit Bureau (SCCB, largely domestic customers) reports sold (-5% yoy). While operating margins in 1H22 for both segments have stayed broadly stable at c.57% for its FI business (1H22: 58%) and c.41% for its non-FI business (1H21: 43%), we raise our opex estimates and tone down non-FI revenue to reflect softer domestic demand in 2H22F.
Contributions from Cambodia on the rise, but Myanmar on hold
Improving operating performance in Cambodia, from a rise in credit activities and scoring products drove, CBA’s share of results from JVs to S$0.8m in 1H22 (+54% yoy). Operations in Myanmar have yet to pick up, given the political situation there, and had contributed a S$50k share of loss in 1H22. We understand that key bureau members have signed up with Myanmar Credit Bureau and are connected and contributing to its database. Credit report sales may begin once given the go-ahead by the central bank. In Vietnam, CBA is in discussions with potential partners to bid for a credit bureau licence there.
Commencement of digital banks are a key re-rating catalyst
A key catalyst is the commencement of operations of the digital banks in Singapore — 2 digital wholesale banks (DWBs) and 2 digital full banks (DFBs). Our scenario analysis for incremental revenue to CBA from DFBs could raise CBA’s revenue by c.3-6% by endFY26F (see Digital banks kick off new revenue stream, dated 12 Jun 2022).
