Little-known giant set to take center stage in SEA credit reporting

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Hello reader,

It’s safe to say loss-making tech firms once riding a tsunami of investor funds are now forced to scamper in the kiddie pool as a funding winter sets in amid an uncertain macroeconomic climate.

However, that isn’t the case for Southeast Asia’s fintech space, where funding grew 26% in the first half of 2022, compared with the same period last year.

With most of the region’s population being underbanked and unbanked, it is easy to see why the funds continue to flow as fintech is yet to make its inevitable transition (as it has done in other parts of the world) to being an integral part of day-to-day life for most Southeast Asians.

Investors worried about missing the fintech bandwagon can now wipe the sweat off their forehead as today’s featured piece spotlights a little-known Malaysian credit reporting giant, CTOS (CTOS, KLSE), which is not only profitable, but also pays a dividend. Yes, you read that right.

That’s just a part of the good news: With rising revenue and expanding EBITDA margins, on top of a diversified client base, CTOS is set to stay the dominant player in Malaysia for the foreseeable future, brushing off competition from the likes of Dun & Bradstreet Malaysia, a unit of Credit Bureau Asia (TCU, SGX).

However, an acquisition spree that has seen CTOS splurge more money than it raised in its IPO – the largest on the country’s stock exchange, last year – hints at wider ambitions that could lay outside Malaysia and traditional credit reporting.

While CTOS has hit pause on its buying for “next one to two years,” the question still remains: Why tweak a winning formula, especially if there is still plenty of room to grow for Southeast Asia’s credit reporting market?

This is a conundrum my colleague, Simon, looks to unravel in today’s Big Story as he delves into CTOS’ financials as well as the finer details of Southeast Asia’s considerably underpenetrated credit-reporting space.

— Shravanth

THE BIG STORY

Image credit: Timmy Loen

Malaysia’s CTOS reports strong Q3 results, set to ride SEA’s fintech wave
The credit reporting agency has been seeing strong results, with multiple acquisitions fueling growth. Will a pause in deal-making change anything?

See also: GoTo Group’s (GOTO, IDX) Tokopedia making strides in credit scoring

3 Trends to keep an eye on

2 Eye-popping facts

The ones you didn’t see coming