CTOS Digital Bhd (CTOS) engaged in the business of credit reporting, digital software related services, software development, outsourcing and training services. Their solutions and services are widely used by Malaysia’s banking and financial institutions, insurance and telecommunication companies, large corporations, SMEs as well as consumers for self-checking credit scores.

YoY, the bottomline rocketed as revenue from the poultry segment increased mainly due to (i) higher sales volume of DOC in Malaysia and Indonesia, (ii) higher average selling price (ASP) and sales volume of broiler chickens and eggs in Vietnam, and (iii) subsidies from Malaysia’s government on livestock of RM24.9m. Besides, higher contribution from the feedmill segment was primarily attributed to higher ASP and sales volume in Indonesia and Vietnam.

For 9M23, the lower core net profit was mainly due to the share of losses of associate at RM4.7m vs. a share of profit of RM9.8m in 9M22. The group saw an improvement in revenue as revenue contribution from the Consumer and Food ware division rose 6.9% for the period. Meanwhile, turnover from the filing division remained largely unchanged.

The FBM KLCI registered a mild loss, extending its declining streak for the fifth straight session amid pervasive external negative sentiment. On the global front, Wall Street wobbled into the negative territory on the final day of February 2023 as consumer confidence came in below expectation. Also, as the outlook from the Fed remains hawkish, the upside on the global stocks market could be limited for now. Meanwhile, we reckon the local bourse may trade in a cautious tone amid the tail end of the earnings season as well as the lack of fresh catalysts environment.

Moving forward, OSK’s property development unbilled sales of approximately RM1.00bn will sustain earnings visibility over the next 18-24 months. We have penciled RM1.00bn of property sales in FY23f, backed by several upcoming highrise developments across Klang Valley and the on-going 2 township developments. Meanwhile, their 2,003-ac of landbank will ensure earnings sustainability over the long run, backed by the strong historical track record of take-up rates.

We gather that production volumes for FeSi rose 3.6% to 71,426 tonnes in 2H22 vs. 68929 tonnes in 1H22. Cumulatively 140,355 tonnes make up to 93.6% of our assumption of 150,000 tonnes. On the other hand, production volumes of Mn alloys fell 21.3% to 95,506 tonnes in 2H22 vs. 121,307 tonnes in 1H22. The decline was due to 4 manganese alloy furnaces were shut down in stages for major maintenance works in 4Q22. We expect production to tick slightly lower in 2023 with FeSi at 125,000 tonnes and Mn alloys at 210,000 tonnes due to the conversion progress of 2 furnaces to produce MetSi.

Moving into 2023, we expect further improvement in performances. This will be backed by their execution of its robust orderbook replenishment in recent two years. We reckon that margins may at mid-single digit level in subsequent years.

While market cycle has been establishing a long trough floor, resin price continued to see consolidation in 4Q22. Market was hit by massive oversupply due to uninspiring demand environment. Nevertheless, we expect spot resin activity to gradually pick up in FY23, but demand may remain slow at least for 1H23.