Brokers’ take: CGS-CIMB cuts TDCX target price to US$18 on slower growth estimates
Tan Nai Lun
CGS-CIMB cut its target price on digital customer experience solutions provider TDCX to US$18 from US$24 as it expects the company will face slower agent growth amid recent macro uncertainties.
In a report on Wednesday (May 25), the research team cut its earnings per share estimates for TDCX by 5.8 per cent in FY2022, 4.9 per cent in FY2023 and 5 per cent in FY2024, noting that macro uncertainties had temporarily delayed clients’ project commitments.
CGS-CIMB, however, maintained its “add” call on the counter as structural trends likely remain intact, with outsourcing still the preferred way for new economy sectors to grow.
Shares of the Singapore-headquartered TDCX, which is listed on the New York Stock Exchange, closed US$1.41 or 10.4 per cent lower at US$12.15 on Wednesday.
TDCX on Wednesday said net profit for its first quarter ended Mar 31 fell 0.6 per cent on year to S$22.2 million, as it reported a 38.9 per cent jump in employee benefits expenses.
Meanwhile, revenue grew 26.9 per cent on year to S$152.4 million in the first quarter, which it attributed to a rise in revenue from providing omnichannel customer experience solutions and sales and digital marketing services.
BT in your inbox

Start and end each day with the latest news stories and analyses delivered straight to your inbox.
While TDCX continued to perform well in terms of client wins, CGS-CIMB expects incremental revenue contributions will only be more visible from FY2023 onwards, as new clients typically take time to scale up campaigns.
The research team also noted that TDCX had cut projections for its full-year revenue due to near-term headwinds from macro uncertainties, with some clients temporarily holding back commitments to further scale up campaigns and project awards.
Nevertheless, CGS-CIMB expects on-quarter revenue growth will accelerate again in the second half of 2022 amid further recovery in travel and hospitality segments.
TDCX should also benefit from the demand for outsourcing, which the research team expects will remain strong as companies can remain agile and scale operations at a fraction of the cost of building in-house resources and capabilities.
Copyright SPH Media. All rights reserved.