KUALA LUMPUR (May 7): Following its record-breaking year in 2023, CTOS Digital Bhd posted a 25.6% year-on-year jump in its first quarter net profit this year, as it recorded higher revenue and lower tax expense following the approval of a tax incentive for its main subsidiary CTOS Data Systems Sdn Bhd (CDS).

Its net profit rose to RM20.82 million for the first quarter ended March 31, 2024 (1QFY2024), from RM16.58 million a year ago, CTOS’ Bursa Malaysia filing on Tuesday showed.

Quarterly revenue expanded by 20.1% to RM71.58 million from RM59.59 million, as revenue from all customer groups, namely key accounts, commercial and direct-to-consumer, grew with higher sales of the CDS reports and digital solutions.

According to CTOS, its effective tax rate for 1QFY2024, excluding share of profits of associates, was 7.8% lower than the statutory tax rate of 24%. This is because CDS had received approval from the Ministry of Finance via the Malaysia Digital Economy Corporation (MDEC) on Oct 26, 2023, to extend its five-year income tax exemption until November 2026.

CTOS declared a first interim dividend of 0.64 sen per share for FY2024, to be paid on July 2. In the corresponding quarter last year, the group paid 0.43 sen.

In FY2023, CTOS achieved a record high net profit of RM118.37 million, up 65.05% from FY2022’s RM71.72 million, as its fourth quarter net profit jumped amid higher revenue and the recognition of a tax credit of RM26.03 million — versus a tax expense of RM4.71 million in the corresponding quarter of the previous year — due to the overprovision of prior year taxes. Revenue for FY2023 grew 34.2% to RM261.44 million from RM194.78 million in FY2022.

Looking ahead, CTOS said the group remains positive about its growth trajectory, driven by strategic expansions and robust operational performance across all business segments.

It said its recent expansion into Indonesia and the Philippines had opened significant avenues for growth. “We plan to integrate our established expertise with local market insights, to offer a comprehensive suite of credit-centric solutions, thereby enhancing our competitive edge in the Asean market,” it said.

On strategic investments, CTOS said it will continue to focus on identifying and nurturing synergistic opportunities across Malaysia and Asean, as the group’s goal is to serve a diverse client base, ranging from major banks to emerging small- and mid-sized enterprises (SMEs), by providing innovative digital lending solutions.

“Barring any unforeseen disruptions, we maintain a positive outlook for the medium- to long term. The group’s growth potential extends beyond our current operations into new verticals and broader geographical footprints. Committed to delivering value and fostering innovation, we are optimistic about fuelling sustainable growth in the forthcoming periods,” CTOS said.

CTOS shares closed one sen or 0.72% higher at RM1.40 on Tuesday, giving the group a market capitalisation of RM3.23 billion.