CGS-CIMB Research analyst Andrea Choong has kept her “add” call on Credit Bureau Asia (CBA) but cuts her FY2022-FY2023 EPS estimate by 3%-5%.
“While operating margins in 1HFY2022 for both segments have stayed broadly stable at about 57% for its financial institution (FI) business and about 41% for its non-FI business, we raise our operational expenditure estimates and tone down non-FI revenue to reflect softer domestic demand in 2HFY2022,” says Choong.
CBA’s 1HFY2022 PATMI of $4 million formed 47% of CGS-CIMB’s estimate. Its steady business growth across all segments drove 1HFY2022 revenue higher by 5% y-o-y but was partially offset by lower non-operating income from less government grants received and higher opex due to increase in headcount to fulfil operational and compliance requirements as well as salary adjustments.
Revenue from CBA’s FI data business rose 7% y-o-y, driven by both an increase in the number of bulk review reports and a rise in new credit application reports as consumer credit growth picks up.
Meanwhile, revenue from its non-FI data business increased 4% y-o-y as higher demand from increased compliance and risk management requirements by overseas customers were dampened slightly by fewer Singapore Commercial Credit Bureau reports sold.
CBA’s improving performance in Cambodia from a rise in credit activities and scoring products drove its share of results from JVs to $800,000 in 1HFY2022, a 54% increase y-o-y. Meanwhile, its operations in Myanmar have yet to pick up given the political situation and had contributed a $50,000 share of loss in 1HFY2022.
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“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,” Choong notes.
She adds that the commencement of operations of the digital banks in Singapore is a key rerating catalyst. CGS-CIMB’s scenario analysis for incremental revenue from digital full banks could raise CBA’s revenue by 3%-6% by end FY2026.
Choong maintains her target price at $1.20.
As at 9.15am, shares in CBA are trading flat at $1.
