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RESEARCH: Credit Intelligence – Banking on Bankruptcy

FYI | Dec 21 2018

By Pitt Street Research

Unique proposition in highly lucrative bankruptcy services

Credit Intelligence ((CI1)) is a Hong Kong-based debt restructuring and personal insolvency management service provider. CI1 has been a trusted partner for global banks for over 16 years. Considering the significant number of personal insolvency cases every year as well as the lack of experienced debt restructuring consultants and bankruptcy service administrators, we believe CI1 has substantial growth opportunities. 

Highly scalable platform for bankruptcy management

CI1 is a market leader in a business that requires minimal capital. The operations are highly profitable, with net margins of ~40% and a dividend yield >10%. The fully functional IT platform and an experienced team make CI1 valuable for both regulators and financial institutions. It has recently set up joint operations with Cor Cordis and Arrow Business Consultants, to expand into Australia and Singapore respectively, both new markets for CI1. The extended network in these new markets and recurring revenues from the Hong Kong market are expected to drive a re-rating of CI1.

Valuation range of $0.048–0.071 per share

We value CI1 at $0.048 per share base case and $0.071 per share in a more optimistic scenario in which CI1 expands into additional geographies in the next few years. Our valuation is based on a blend of DCF and relative valuation methods, with conservative assumptions on the commercial expansion of the new Australian and Singapore businesses.

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