RESEARCH: Credit Intelligence FY20 Earnings Up 384% YoY

FYI | Sep 10 2020

Pitt Street Research reports Credit Intelligence's FY20 was stronger-than-expected

By Pitt Street Research

Credit Intelligence FY20 Earnings Up 384% YoY

Leading debt-restructuring provider Credit Intelligence ((CI1)) has delivered a stronger than expected result for the year ended June 2020.

Group operating revenue rose 125% YoY to A$13.6M and profit after tax accelerated by 384% YoY to A$2.5M. EPS also grew by 317% YoY to 0.25 cents. DPS was 0.10 cents, which represented a payout ratio of approximately 40%.

At the group level, growth is fuelled by the consolidation of the recent Singapore acquisitions, both of which have delivered FY20 results exceeding their profit guidance.

Backing out acquisitive growth, CI1’s underlying organic revenue still grew a solid 22% YoY, underscoring the robustness of its core Hong Kong business.

Recurring COVID outbreaks create upside for CI1                 

We regard the recent, second wave of COVID outbreaks that took place in Victoria and Hong Kong as favourable to CI1 due to its counter-cyclical business model.

Absent a vaccine, these outbreaks have highlighted the potential recurring nature of COVID waves across the world and their repercussions on the global economy.

For instance, Australia has just officially recorded its first recession in nearly three decades and we believe the second lockdown across its Victorian state due to the second COVID wave could hamper the country’s economic recovery.

Valuation range remains largely intact                

Our valuation remains largely intact at $0.08 – 0.10 per share (previously: $0.07 – 0.10 per share) based on a blended methodology (50:50 DCF and P/E).

Key risks we see in CI1 are: (1) large fiscal support continuing across the globe; (2) Australian acquisition not performing to expectations and (3) availability of a COVID vaccine.

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