CGS International analyst Andrea Choong has kept her “add” call on Credit Bureau Asia TCU (CBA) after the company’s 1HFY2024 ended June earnings of $5.9 million stood above her expectations.
At 15% higher on a h-o-h basis and 25% up on a y-o-y basis, Credit Bureau Asia’s bottomline stood 11% above Choong’s estimates, forming 55% of her full-year numbers. “The beat came from lower-than-expected staff costs (-10% h-o-h, +1% y-o-y), which normalised following the payout of staff incentives in 2HFY2023,” says Choong in her Aug 13 report.
CBA’s revenue, which saw broad-based growth across its financial institution (FI) and non-FI businesses, stood in line with her expectations due to sustained demand for risk management reviews and new credit applications.
The company declared an interim dividend of 2 cents, implying a dividend payout ratio of 78% for the period, and higher than the 1.7 cents declared in the 1HFY2023.
Further to her report, Choong notes that CBA is likely to see lower operating expenses (opex) with more normalised staff costs going forward, as well as the cessation of royalty fees for credit bureau software for Singapore and Cambodia. As such, she has lowered her opex estimates for the FY2024 to FY2026 to factor in these improvements.
For the same period, Choong has raised her earnings per share (EPS) estimates by 8% to 12% as she includes the improved opex and sustained revenue growth.
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She has also raised her target price to $1.30 from $1.20 previously as she expects the pick-up in regional trade activity to continue in FY2024, thereby lifting the demand for credit enquiry services.
As at 3.03pm, shares in Credit Bureau Asia are trading 0.5 cents lower or 0.55% down at 90 cents.
