CTOS counter at all-time low, expat management passing leadership baton

CREDIT reporting agency CTOS Digital Bhd, with its shares hitting near all-time low, is seeing the departure of its chief at a time when it missed targets for three consecutive quarters.
In a report released on April 28, BIMB Securities maintained its 'Buy' call on the counter but loweredits 52-week target price (TP) to RM1.27 from RM1.33 to reflect its trimmed FY25 earnings.
On the same day, HLIB Research downgraded the counter to a 'Hold' from 'Buy' on April 28 with a TP of RM1.10.
CTOS closed at 99 sen on Wednesday, after hitting a 52-week high of RM1.51.
For the first quarter ended March 31, 2025 (1Q25), CTOS's net profit plunged 31% to RM14.4 million on a turnover of RM76.1 million which was up 6% from the same period last year.
The segment profit from the Malaysia operations decreased by 29% to RM17.8 million compared to RM25.2 million in the corresponding period, mainly due to higher sales but offset by higher operational expenditures, it told the exchange.
On April 25, CTOS also informed Bursa Malaysia the impending departure of its group CEO Erick Hamburger 'to explore new career opportunities.'
It said both sides have mutually agreed that Hamburger's last day of employment will be on Sept 30 and Erick will be on leave from May 1.
Until a suitable candidate has been identified, CTOS said the board has appointed its non-independent director Kevin Loh Kok Leong as Interim GCEO with effect from May 1.
In its report, BIMB Securities, a unit of Bank Islam Malaysia Bhd (BIMB), noted the resignation of Hamburger and group chief technical officer James Fancourt Mitchell.
'This development is not entirely surprising after CTOS missed targets for three consecutive quarters. A wave of staff departures and market chatter around a key shareholder-led overhaul was on-going. On the bright side, this is arguably the right moment for the expat management to pass the baton to leadership with deeper local roots,' it said.
While the basics and foundations of the CRA model can be replicated easily from developed markets, it said long-term success ultimately hinges on local adaptation and customisations.
On its outlook, it said the business should continue to expand, supported by solid macro drivers and established systems and its brand prominence.
HLIB Research said it noted that CTOS' 1Q25 core profit fell 31% year-on-year (YoY) due to lower gross profit margin (weighed down by less favourable sales mix) and higher opex (rise in marketing and administrative costs).
'Overall, results were below expectations and thus, we cut FY25-26 earnings by 14-15%. Also, we introduced FY27 estimates and flagged a potential profit cliff that unfortunately requires a recalibration in investor expectations. As such, the stock's risk-reward profile is no longer as compelling as before,' it said. — TMR

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Sinar Daily

5 days ago

• Sinar Daily

The 1Fit fisco: How a popular fitness app left hundreds of Malaysians in the lurch

SHAH ALAM – Hundreds of Malaysian users have been left in limbo after the popular fitness app 1Fit abruptly shut down its operations this month. Despite promoting and renewing memberships up until the very last days, the app's management blamed financial difficulties and announced a liquidation process, leaving users confused, frustrated and calling for government intervention. 1Fit CEO and founder Murat Alikhanov. Photo: 1Fit's official Instagram page. From Fitness Favourite to Sudden Farewell Known for its affordable access to a variety of workouts, from bouldering and pilates to gym and swimming sessions, 1Fit quickly gained popularity among Malaysian fitness enthusiasts. But on June 14, the company shocked its user base by announcing via Instagram that it was ceasing operations in Malaysia. The announcement came alongside a video message from 1Fit Chief Executive Officer (CEO) and founder Murat Alikhanov, who cited unsustainable costs as the key reason for the shutdown. 'This is not how we wanted the story to end. We are heartbroken, for our team, for our partners and for our users who loved the product. To everyone who supported us, thank you. To our Malaysian community, we are deeply sorry that we could not take this further,' Alikhanov said. He claimed 1Fit had invested USD4.2 million (RM17.8 million) into building its Malaysian platform, but despite their efforts, it had become unsustainable. He provided refund instructions via a WhatsApp link, assuring users that refund requests would be processed in queue order and subject to available funds under a formal liquidation process. Users Left Without Access or Answers However, users who paid in advance for memberships ranging between RM1,500 to RM3,500 have been left without services or clarity. Many were unable to use their full subscriptions, including Maine, a user who had paid RM2,500 for a 15-month plan but had only used it for 2.5 months since joining in April. Her friend, who had been on the app for nearly a year, also suffered losses and had submitted a refund request, awaiting further updates. As of the date of the closure, many users reported a lack of official communication and radio silence across 1Fit's support and social platforms. A statement shared by affected users revealed that over 600 individuals have since joined a WhatsApp support group in hopes of coordinating efforts and sharing information. Many voiced concerns that the only available refund process, a Google Form requiring users to agree that refunds are subject to queue order and available funds, felt untrustworthy and vague. 'To date, many affected users have reported a lack of official communication from 1Fit regarding reimbursements. The company's social media platforms and customer support channels have gone silent, leading to growing concerns over transparency and accountability,' the group shared. Was It a Scam? Users Question 1Fit's Ethics Critics and users have taken to Instagram to vent their frustrations. 'What happens to those who recently paid over RM2,500 for a full-year membership? Why shut down so abruptly without any prior warning? After raising the membership price, the company suddenly closes. Was 1Fit a scam all along?' @aafiqazlan questioned. User @idorashazlina tagged the police and demanded an investigation. 'You were just urging everyone to renew their membership and now, barely a week later, you pull this stunt? Something does not add up,' she said. Another user, @yee_minnn, accused the company of knowingly misleading consumers. '1Fit continued to actively promote and encourage renewals of their membership plans, despite allegedly being aware that they were on the brink of shutting down. This is a clear breach of ethical conduct,' he said. International Complications and Calls for Government Action Adding to users' concerns is the fact that 1Fit also previously shut down in Mexico, allegedly without refunding users there. To make matters more complicated, Alikhanov is reportedly based in Kazakhstan, creating cross-border legal barriers that hinder Malaysian users from pursuing direct legal action or claiming refunds. Affected users are now urging the Malaysian government to intervene, calling on the Domestic Trade and Cost of Living Ministry (KPDN), the Communications and Digital Ministry and the Youth and Sports Ministry to step in. 'The 1Fit episode represents more than a failed startup, but a wake-up call for how well Malaysia protects its citizens from businesses such as this. "We urge the ministries to break the silence and stand up for Malaysian consumers now,' the statement added. What Now for Users? As of now, there is no new official statement from 1Fit and refund status remains unclear. Users have been advised to document their payments, join user support groups and report the issue to consumer protection agencies like KPDN or National Consumer Complaints Centre (NCCC).

New Straits Times

5 days ago

• New Straits Times

Solarvest's Brunei project could generate RM100mil via JV, says HLIB

KUALA LUMPUR: The solar project secured by Solarvest Holdings Bhd in Brunei is expected to deliver up to RM100 million in value to its 49 per cent-owned joint venture, according to Hong Leong Investment Bank (HLIB Research). Solarvest secured a 25-year power purchase agreement (PPA) through its 34 per cent-owned joint venture (JV), Seri Suria Power (B) Sdn Bhd. The agreement, inked with Brunei's Department of Electrical Services, will see the JV build, own and operate a 30 MWac ground-mounted photovoltaic (PV) plant atop a remediated landfill in Kampong Belimbing, Kota Batu. Commercial operations are expected to begin by the end of the calendar year 2026, with construction scheduled to start in the third quarter of 2025. Seri Suria Power is a partnership between Solarvest and local entities Khazanah Satu Sdn Bhd — a Bruneian government investment arm under the Finance Ministry — and Serikandi Oilfield Services Sdn Bhd, an energy and infrastructure service provider. HLIB Research said in a note the engineering, procurement, construction, and commissioning (EPCC) scope is expected to deliver between RM80 million and RM100 million in value to Solarvest's 49 per cent-owned EPCC JV, expanding its existing RM1.2 billion order book. "Capital expenditure for the plant is projected at B$35 million (about RM116 million) and should have minimal balance sheet impact considering equity funding required from Solarvest amounts between RM7 million and RM10 million. "Meanwhile, our preliminary project internal rate of return estimation could come in the 'high single digit' range – a reasonable figure, in our view," the firm said. HLIB Research added Solarvest's management aims to grow its order book beyond RM2 billion in the financial year ending March 2026 (FY26), supported by domestic clean energy initiatives such as LSS5, MyBeST, LSS6 and the CRESS programme. The group's tender pipeline remains robust at 5.86 gigawatt-peak (GWp), with battery energy storage systems (BESS) also emerging as a key growth area. HLIB Research maintains a "Buy" rating on Solarvest with an unchanged target price of RM2.25, based on a sum-of-parts valuation comprising a 25 times price-to-earnings multiple for its EPCC business and discounted cash flow for its recurring income assets. Key risks to the outlook include execution delays, political uncertainties and potential fluctuations in material and labour costs.

The Star

13-06-2025

• The Star

Expansion, new orders to lift VSI's earnings despite trade uncertainty

CIMB Research cut its earnings per share forecasts by between 10% and 20% for FY25 to FY27. PETALING JAYA: Analysts remain divided on the outlook for electrical and electronics manufacturing company VS Industry Bhd (VSI) following the release of its results for the third quarter of its financial year ending July 31 (3Q25), which came in below expectations. VSI posted net profit of RM23.77mil and revenue of RM909.41mil for the quarter. This was down from RM54.42mil and RM1.01bil in the same quarter a year ago. The results came in below CIMB Research's expectations, accounting for 49% of its full-year estimate and 52% of consensus. The year-to-date earnings declined 42% year-on-year and was said to be mainly due to weaker demand, higher labour costs in Malaysia, and start-up expenses from its new operations in the Philippines. Given the ongoing demand uncertainty amid subdued consumer sentiment and possible tariffs, CIMB Research cut its earnings per share forecasts by between 10% and 20% for FY25 to FY27. 'Near-term order flows from Malaysia and Singapore will remain dependent on evolving consumer sentiment and clarity on US tariffs following the end of the 90-day grace period in early July,' CIMB Research said. Following its earnings revision, CIMB Research maintained a 'hold' call on VSI with a lower target price of 79 sen, adding that the discount appropriately captures the heightened earnings risks. Hong Leong Investment Bank Research (HLIB Research) also flagged concerns about the group's earnings visibility. HLIB Research reported that VSI's core profit after tax and minority interest of RM69.6mil for the nine months of its current financial year (9M25) was 26.3% lower, meeting only half of its full-year forecast. 'While we anticipate some frontloading activity from US-exposed customers in 4Q25, we see downside risk to management's FY26 guidance given potential inventory adjustments and an uncertain order environment after frontloading,' HLIB Research said. Despite this, the research house pointed to a potential earnings boost from the ramp-up of the group's Philippines operations and a newly secured contract from a big customer. HLIB Research maintained its 'hold' rating on VSI with a lower target price of 72 sen, from 86 sen.