FYI | Nov 25 2019
Pitt Street Research finds Credit Intelligence should benefit from recent acquisitions plus social unrest in Hong Kong.
By Pitt Street Research
Acquisitions to support geographical expansion
Credit Intelligence ((CI1)) recently announced the acquisition of two Singapore-based credit funding institutions – ICS Funding Pte Ltd and Hup Hoe Credit Pte Ltd.
These deals provide CI1 access to the credit funding market of Singapore for personal and corporate loans. CI1 will now have two additional advantages: (i) additional stream of high-margin revenue; (ii) scope for aggressive expansion in a new geography.
HK economic slowdown provides opportunity
As the socio-political situation in Hong Kong becomes more difficult, the volatile economic conditions will support CI1’s revenue growth.
As the situation remains uncertain, lower consumer spending, declining corporate investment and subdued business activity will propel insolvency filings.
Further, the advancement of its recently launched app will help handle a huge volume of cases, thereby supporting margin expansion.
Valuation increased to $0.06 – 0.08 per share
We have altered our assumptions and included the impact of two new acquisitions as well as the unexpected boost to business from the Hong Kong turmoil.
We now value CI1 at $0.06 per share base case (was $0.048) and $0.08 per share in a more optimistic scenario (was $0.071). Our valuation is based on a blend of DCF and P/E-based relative valuation methods.
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