CREDIT BUREAU ASIA LIMITED (SGX:TCU)
Credit Bureau Asia - Venturing Into Vietnam
- Credit Bureau Asia announced it will be entering into a JV with FiinGroup in its inaugural foray into Vietnam, aiming to provide analytics and data solutions to FIs.
- The JV aims also to set up a credit bureau in Vietnam. Credit Bureau Asia (SGX:TCU) sees significant potential as ~38% of Vietnam’s 97m-strong population remain underbanked.
- Reiterate ADD with target price of S$1.53 for Credit Bureau Asia. We expect S$4.7m PATMI in 1H21F (+17% y-o-y) to be sustained by risk review volumes and a pick-up in credit growth.
Enroute to establishing a private credit bureau in Vietnam
- Credit Bureau Asia announced that it has signed a Memorandum of Understanding (MOU) with FiinGroup JSC (FG) to form a joint venture (JV) in Vietnam to provide analytics and data solutions to banks and non-bank financial institutions (FIs). The JV will also explore establishing a private credit bureau in Vietnam. Credit Bureau Asia aims to finalise the contractual details of the MOU by end-2021.
- The JV’s scope of operations will include facilitating and supporting the data analytics capabilities of FIs, credit granting agencies, payment services providers, ‘Buy Now Pay Later’ players, as well as mass market service providers such as telcos. The JV’s goal of establishing a full-service private credit bureau will incorporate traditional data (e.g. bank-lending data) and alternative data points (e.g. behavioural payment patterns, supply chain data) in its approach.
- Credit Bureau Asia sees significant potential in penetrating the Vietnam market as the company estimates that ~38% of its ~97m population are unbanked and underserved. We understand that there are currently two credit bureaus in operation in Vietnam – Credit Information Centre Vietnam (state-owned) and Vietnam Credit Information Joint Stock Company (PCB).
Positioning MLCB as an additional avenue of growth
- Credit Bureau Asia’s expansion into Vietnam continues its streak of establishing new business opportunities. In Jun, the company announced that it had been designated as the new operator of the Moneylenders Credit Bureau (MLCB). As a central data repository of borrowers’ loans and repayment records with licensed moneylenders, Credit Bureau Asia aims to eventually incorporate these data points into its broader FI Data Business, creating cross-selling opportunities. Currently, data from the MLCB and FIs do not commingle. We estimate that revenue contributions from MLCB are relatively small at this stage.
- Launched in 1Q21, the development of Credit Bureau Asia’s operations in Myanmar remain sluggish given the ongoing political situation. We understand that ~30 FIs have signed on as members but the onboarding process has been disrupted. Note that we have not factored in contributions from Myanmar for FY21F.
We expect 1H21F earnings to be supported by risk review volumes
- We expect Credit Bureau Asia to record PATMI of S$4.7m in 1H21F (+17% y-o-y on PATMI adjusted for listing expenses), supported by sustained volumes of bulk risk reviews (subscription packages of these reviews are generally drawn down over 1-2 years) and a pick-up in new credit applications (Domestic Banking Unit [DBU] consumer loan growth in 1H21: +2.9%, 1H20: -3.2%).
- See
- Credit Bureau Asia will be releasing its 1H21 results after-market hours on 5 Aug. Our target price of S$1.53 is based on DCF methodology (Long term growth: 1.2%, WACC: 7.0%, risk-free rate: 1.5%, beta: 0.9).
- Stronger-than-expected credit growth in Singapore as the economy reopens is a re-rating catalyst.
- A prolonged political situation in Myanmar is a downside risk.
Andrea CHOONG
CGS-CIMB Research
|
Darren ONG
CGS-CIMB Research
|
https://www.cgs-cimb.com
2021-08-02
SGX Stock
Analyst Report
1.530
SAME
1.530
