RESEARCH: Credit Intelligence Earnings Quadrupled

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Pitt Street Research explains why Credit Intelligence stands to benefit from the coronavirus economic impact

By Pitt Street Research

Credit Intelligence ((CI1)) delivered a very strong 1H FY20 result. Revenue rose 116% YoY to $6.1m and profit after tax increased by a remarkable 355% YoY to $1.3m. EPS also lifted by approximately 333% YoY to 0.13 cents.

The overall growth is supplemented by the consolidation and integration of the recent acquisitions in the Singapore credit funding market which have performed strongly over the 6 months ending December 2019.

Backing out the acquisition growth component, CI1’s underlying organic revenue growth was still at an impressive 34% which reflects advancement in its Hong Kong business.

COVID-19 is a near to medium term profit driver

Given CI1’s counter-cyclical operating model, the business performs more favourably under adverse economic circumstances. The recent coronavirus outbreak has spun the global economy into a state of downturn and uncertainty.

As the performance of businesses across the world continue to deteriorate, the level of bankruptcy filings should in our opinion elevate. Accordingly, we see coronavirus as a unique catalyst that will drive CI1’s near-term profitability.

Valuation range reiterated at $0.06 – 0.08 per share

We have revised our near-term revenue forecasts to factor in the upside risk from the coronavirus event. We also revised our FY20 estimates for the Singapore business in line with updated company guidance.

Overall, our valuation range remains largely intact at $0.06 – 0.08 per share.

Download the full report

Yesterday the report above was released by Pitt Street Research for which FNArena is a partner in distribution. The full report can be accessed here:

https://www.fnarena.com/index.php/pitt-street-research/CI1/

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