Yowza! The Credit Intelligence (ASX:CI1) share price is up 130% in 2 months

Credit Intelligence Ltd (ASX: CI1) shares rocketed higher today, up 31.43% to 4.6 cents a share.

The Credit Intelligence share price opened at 3.6 cents this morning after closing at 3.5 cents yesterday. But soon after open, the company’s shares exploded to reach a high of 6 cents a share shortly after lunchtime today.

That means the company’s shares were up around 71% at one point, despite having cooled off since. Today’s closing price also means the Credit Intelligence share price is now up 130% since 16 December last year. Today’s moves were enough to warrant an ASX ‘please explain’ speeding ticket this afternoon as well.

So what is this company? And what is sparking such a dramatic re-valuation?

Credit Intelligence is a debt restructuring and personal insolvency management business. It operates primarily in Hong Kong and Singapore, although the company has expansion plans in place for the Australian market.

What’s been driving the Credit Intelligence share price?

The company likely started turning heads following its annual general meeting late last November. In this meeting, Credit Intelligence reported that its revenues for FY2020 had grown by 125% (from $6.05 million to $13.61 million) and its profits by 384% (from $934,000 to $4.54 million). The company also doubled its dividend and reported earnings per share (EPS) growth of 333%.

Interestingly, Credit Intelligence told investors that the company was being supported by “favourable macroeconomic conditions”. As such, it advised the market that “COVID-19 related unemployment [and the] recession will massively increase demand for [its] services… for years to come” and that these conditions are “not yet reflected in growth numbers”.

Although these announcements were evidently well received by investors at the time, it doesn’t explain what’s happening today with the Credit Intelligence share price. Indeed, the company has not released any market-sensitive information or major announcements in recent days, save for a release back on 8 February.

In that release, Credit Intelligence discussed its plans for a “next-generation, technology-enabled platform that will provide a better solution for the coming wave of millennial debts caused by BNPL [buy now, pay later services]”.

There have been a plethora of companies involved in the buy now, pay later arena being inundated with volume surges and share price spikes this week. As such, it is possible that Credit Intelligence has been caught up in this euphoria.

However, in response to the ASX’s pricing enquiry today, Credit Intelligence flatly denied any knowledge of possible causes for the surge in activity. It did not offer any speculation as to the underlying cause of the Credit Intelligence share price spike either.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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