Credit Bureau Asia

[weijian]

These are probably times we haven't seen for some time on the local SGX market.

Rather than the boring real estate deals for the longest time, these are high PE stocks on IPO and then further increased its price after IPO to have higher PE.

Will this shoots of exuberance be the start of more animal spirits to come?

Credit Bureau Asia debuts with strong trading on SGX Mainboard

Opening and closing prices of S$1.15 and S$1.07 per share respectively, above the offering price of S$0.93 per share

A total of approximately 9.4 million shares were traded

https://links.sgx.com/FileOpen/CBA%20-%2...eID=641513

[weijian]

An interesting (almost) debt free company with pretty strong moats in its existing business. As usual, such companies don't come cheap.

Asset
- A high margin (NPM of 40%), asset light business. The assets are all in the intangibles on the agreements that they have with Dun & Bradstreet and Equifax

Business
- The moat is around the established Spore's Credit Bureau since 2003 and that is where most of the business comes from. It is not compulsory for banks to get a credit report for lending but the norm. Because it is the norm to tick the boxes (and cover your axx), the business is more sticky than those regulated. Cambodia/Myanmar are the captive markets as regulations require a credit report before lending can be done. These frontier markets are probably where the wild card is, in terms of earnings growth.

-  From the prospectus, Dun & Bradstreet Singapore is in a duopoly with Experian Credit Services Singapore in selling customer reports in Singapore. It is probably not going to change too much as this 2 companies continue to address pain points of the buyers of such reports.

Structure
- The key man risk is immense. This company strives and dies on regulation. Key men needs to have minimum holdings in the company, and any new substantial shareholders need to be approved by the Regulator.

- Raised 27mil in IPO proceeds in 2020 but paid out similar sums in FY20 before the IPO. From FY17-20, net ~50mil flowed out from company in the form of dividends. This is an immensely FCF generative business!

[BigFatWhale]

Moody's of South East Asia- Credit Bureau Asia

With the recent plunge in prices of Credit Bureau Asia to below $1, we have penned an article to discuss the merits of investing in this strong moat and high margins business.

Given their balance sheet strength where a quarter of their current price is backed by cash, it adds to the margin of safety. 

However, it is not trading at a Graham like valuation with PE coming in at 32. Nonetheless, it is highly cash flow generative with a cash flow of 20 million vs 8 million profits in 2020. This would be more of a Buffet Play.

Here is the full article to our write up on Credit Bureau Asia:

https://thebigfatwhale.com/moodys-of-sou...reau-asia/

[weijian]

Chairman/CEO has been spending some decent money in the past year buying shares ~1.40sgd (1.5mil in Feb2021), ~1.15-1.3sgd (1.4mil in Aug-Dec2021) and latest at 1.04sgd (1.4mil in Jan2022). This is in the context of him selling 26.1mil shares at 93cents (for a total of 24.2mil) during IPO.

[weijian]

I wonder what implications will this legal case at neighbouring Msia has on CBA's consumer credit score business in Spore? CTOS Digital is the market leader for this similar business in Msia. CBA licenses Equifax software to conduct its credit bureau scores (for consumers) in Spore.

What is at stake at CTOS

A High Court ruling against a unit of CTOS Digital Bhd, in favour of a businesswoman suing it for negligence and breach of fiduciary duty, cast the spotlight on the credit reporting agency’s business model

It was not the first defamation case CTOS had lost, but the Suriati case was the first where the judge touched on whether CTOS had legal grounds to formulate credit scores under the Credit Reporting Agencies Act 2010.

https://theedgemalaysia.com/node/704813

[weijian]

I wonder what implications will this legal case at neighbouring Msia has on CBA's consumer credit score business in Spore? CTOS Digital is the market leader for this similar business in Msia. CBA licenses Equifax software to conduct its credit bureau scores (for consumers) in Spore.

What is at stake at CTOS

A High Court ruling against a unit of CTOS Digital Bhd, in favour of a businesswoman suing it for negligence and breach of fiduciary duty, cast the spotlight on the credit reporting agency’s business model

It was not the first defamation case CTOS had lost, but the Suriati case was the first where the judge touched on whether CTOS had legal grounds to formulate credit scores under the Credit Reporting Agencies Act 2010.

https://theedgemalaysia.com/node/704813

A layman like me will think this is unfair. But the investor in me, gets excited when such "unfairness" happens.

COA overturns High Court decision that required CTOS to pay damages to businesswoman

He added that the coming into force of the CRA did not preclude Suriati’s right in law to make the claim for negligence.

“This presumes that the CRA owes a duty of care under common law,” he added.

https://theedgemalaysia.com/node/718291