Confirming the legality of credit scores, securities have been revised to CTOS

Research analysts at Kennag Investment Bank pointed out that the appellate court ruled that under common law, credit reporting agencies have no obligation of care, and can establish and publish credit scores in accordance with legal provisions as part of the credit reporting business.

Analysts believe that this could eliminate any existing questions and ambiguities that may arise from future cases relating to interpretations relating to this type of legislation, that is, credit reporting agencies.

As a result, analysts raised the CTOS digital rating from “below market” to “surpass market” and drastically raised the target price from RM1.15 to RM2.

“After this favorable ruling came out, the stock risk premium disappeared, and we restored the capital cost weighted average (WACC) discounted cash flow investment from 7% to 6%, while also raising the terminal growth rate to 3.5%, compared to 0% previously.”

At the same time, the Societe Generale Investment Bank research pointed out that since the legality of formulating and issuing credit scores is no longer being questioned, this will boost the business of CTOS Digital and its Credit Reporting Agency (CRA).

“Such a ruling may prevent similar claims in the future.”

Analysts said this prevented the potentially large number of claims that the CTOS figure might face, and the risk premium was lowered, so the target price was raised to RM1.84 and the “hold on” rating was maintained.

Also, the one that also maintains the CTOS digital “hold” rating is Hong Leong Investment Bank Research.

Although analysts at Hong Leong Investment Bank believe that the above results are a positive victory for the company, based on recent stock price performance, the market has already absorbed this favorable judgment ahead of schedule.

Before the price plummeted, the CTOS figure had a one-year high of only RM1.52, and it was fluctuating most of the time.

Therefore, analysts believe that there may be quite limited room for stock price growth from now on, so the target price was slightly raised from RM1.50 to RM1.60.

Looking back at the beginning and end of the incident, in March of this year, the High Court ruled that CTOS digital had no power to determine user credit ratings, and was awarded compensation of RM0.25 million to the merchant Suriyati.

At the time, the CTOS digital stock price plummeted to a low of RM1.06 per share, but it soon rebounded and has now rebounded to RM1.45.

On Tuesday, the Court of Appeals unanimously overturned the High Court's ruling. The CTOS figures were appealed directly and there was no compensation. Before announcing the suspension of trading on the same day, the stock price surged 7 cents or 5% to close at RM1.45, with a trading volume of 12.96 million7,800 shares.

By Wednesday, the CTOS digital early trading performance was steady, with limited gains, and even fell to RM1.43 for a while, after which the stock price fluctuated.

When the market closed, the CTOS figure reported RM1.45, with no ups or downs. The full-day trading volume was 22.73 million shares.