CTOS hits all-time low following wave of downgrades

On September 23, CTOS Digital Bhd disclosed a cybersecurity incident affecting its consumer business. Following this revelation, major research houses Hong Leong Investment Bank, Kenanga Investment Bank, and CIMB Securities downgraded their ratings on the credit reporting agency. Their actions led to CTOS Digital hitting an all-time low on October 3.

Shares plummeted up to 17%, or 8.5 sen, to 41.5 sen before closing slightly higher at 42 sen. The company's market value dropped to RM929 million, down about 40% for the year, trading 62% below its July 2021 IPO price of RM1.10.

The cybersecurity breach resulted in Bank Negara Malaysia suspending the Central Credit Reference Information System (CCRIS), disrupting CTOS's credit reporting services like CTOS Score. The incident is anticipated to cut FY2026's net profit by RM12 million and revenue by RM16 million, assuming unsolved service issues persist until the third week of October.

Investment banks reduced their target prices for CTOS Digital, warning of a substantial earnings impact. HLIB cut its call from "buy" to "hold," lowering its target price to 50 sen and reducing FY2026-2028 earnings forecasts by 18%, 15%, and 14%, respectively. Kenanga Investment Bank downgraded its rating to "market perform" and reduced its target price from 83 sen to 48 sen, citing heightened operational, regulatory, and reputational risks.

CIMB Securities highlighted potential longer-term implications for customer retention, cybersecurity costs, slower transaction volume recovery, and possible customer migration to alternative providers, which could weigh on earnings next year.