Andrea Choong of CGS International has kept her 'add' call and $1.20 price target on Credit Bureau Asia TCU , with a view that the provider of credit data should see a sustained business amid a high-interest rate environment.
For its 2HFY2023 ended Dec 2023, Credit Bureau Asia reported earnings of $5.1 million, up 16% y-o-y and up 9% over 1HFY2023, thanks to stronger than expected revenue for its financial institution data business.
This brings the company's full-year earnings to $9.8 million, up 17% from FY2022.
Credit Bureau Asia plans to pay a final dividend of 2 cents per share, an increase of 18%. This will bring the full-year payout to 3.7 cents.
Among its regional businesses which are run in the form of joint ventures, Credit Bureau Asia sees an earnings improvement of 28% for Cambodia, but a "relative standstill" for Myanmar, given the ongoing political situation.
Within Singapore, the relatively new digital banks have been seen as possible earnings drivers as they are assumed to sign up more new customers, thereby requiring credit history checks provided by Credit Bureau Asia.
According to Choong in her Feb 27 note, just one of the five digital banks here has generated activity levels "comparable" with other financial institutions.
Nonetheless, she has kept her "add" call on this counter with an eye on the pick up in regional trade activity which will help lift overall demand for credit enquiry services.
"Progressive growth of business activity amongst digital banks in Singapore is a key re-rating catalyst," says Choong.
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On the other hand, the prolonged uncertain political situation in Myanmar, affecting the subsidiary Myanmar Credit Bureau (MMCB), is a key downside risk.
Another such risk is the introduction of additional credit bureau licences in Singapore, where Credit Bureau Asia is one of the mere two license holders providing financial institution data business services.
