It might seem like doom and gloom for much of the stock market at the moment, but for financial services company Credit Intelligence (ASX: CI1), now is the time to shine.
Offering debt restructuring, credit funding and bankruptcy administration services, the Hong Kong and Singapore-based lender has had its eye on Australia for some time and is hoping to secure an acquisition in the next few months.
Speaking with Small Caps, Credit Intelligence founder and managing director Jimmie Wong said the company is poised to take advantage of the current economic environment in Australia, where businesses have been ravaged by the recent bushfires and now the coronavirus outbreak, in addition to the US-China trade tensions that have been ongoing for more than 18 months.
Counter-cyclical operating model
According to Mr Wong, the company’s operating model is designed to perform better under adverse economic circumstances.
“In good times, we can still perform because there are still people who need financial support; but in bad financial times, we can do a lot better.”
“Stock markets all over the world are falling sharply and there may be more [to come] in Europe and USA,” he said, adding that the situation will create “lots of business opportunities” for Credit Intelligence.
But when it comes to lending to companies and individuals in financial strife, the biggest risk would be clients’ ability to make repayments.
The company’s recent financial performance has demonstrated the success of its business model, posting a 355% lift in half-yearly profits after tax to $1.3 million and a 116% rise in revenue to $6.1 million. Earnings per share also lifted 333% year on year to $0.13.
Mr Wong also compared the world’s current macroeconomic condition to the SARS epidemic and the Global Financial Crisis, through which the company fared very well.
Expansion in Australia
Credit Intelligence was established in Hong Kong 18 years ago and holds a dominant position in the market, having worked with HSBC, Standard Chartered Bank, Bank of China and Citibank.
Last year, it expanded to Singapore through the acquisition of two profitable companies, ICS Funding and Hup Hoe Credit.
The company listed in Australia in May 2018 and has been actively seeking acquisitions or joint ventures to expand into the market with plans to establish offices in Melbourne and Sydney.
“We are actively seeking a deal and I hope our [Australian] business can generate profit as soon as possible,” Mr Wong said.
He said Credit Intelligence has been in talks with parties for “several months already” and is hopeful a deal can be finalised as soon as possible in 2020.
Future growth prospects
Mr Wong said he is very confident of the company’s future growth prospects in Australia, along with Hong Kong and Singapore, given the nation’s “happy debt levels” including household debt levels and mortgage stress.
“In terms of the recent plunge in the market caused by the US trade war, the virus and the bushfires, I think Australia’s economy will be much worse than the last 10 years,” he said.
“We are one of the exceptional companies who can do better in bad times and we can do much better in the coming three years,” he added.
Mr Wong noted the company’s results so far don’t reflect the delayed impact from the coronavirus and civil unrest and he is anticipating “staggering” further increases in revenue and profit.
Credit Intelligence’s board comprises several highly experienced financial professionals including Mr Wong, who has more than 20 years of experience as a leading Hong Kong-based insolvency lawyer.
Other board members include head of operations and executive director King Wong, a trustee in bankruptcy and practising solicitor, and non-executive chairman Anthony Peng Ho, an experienced ASX company director and chartered accountant.
Last month, the company announced the appointment of Sydney-based banking expert Mark Paton as a non-executive director.