Key Highlights
- The Vancouver residential market is showing signs of stabilization, which will likely further strengthen the city’s rental market, boosting our outlook on CIBT’s student housing projects.
- In Q1-FY2020 (quarter ended November 2019), CIBT reported $17 million in revenue, up 0.2% YoY.
- Revenue was lower than our estimate, but the company continued to report organic growth in both its key segments – Educational (2.2% YoY) and Rental (10.7% YoY).
- Gross margin increased YoY from 56.4% to 58.1% in Q1-FY2020, and beat our expectations, due to a strong increase in gross margins of rental revenues (46% to 60%).
- EBITDA was $3 million in Q1-FY2020, up 179% YoY. A 55% YoY increase in interest expense impacted the bottom line. After deducting non-controlling interest, CIBT reported a net loss of $0.04 million (EPS: -$0.00), versus net profit of $1.18 million (EPS: $0.02) in Q1-FY2019.
- We are raising our FY2020 net profit estimate from $5 million / EPS: $0.06 to $6 million / EPS: $0.08.
- On December 3, 2019, CIBT announced an agreement to sell one of its properties for $70 million. The sale is expected to be completed in May 2020, which will likely be the next major catalyst for the company’s share price.
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