CIBT Education Group Inc. (TSX: MBA): Q3 Revenues Down, But Core Operations Remain Healthy

Key Highlights

• In Q3-FY2019 (quarter ended May 31, 2019), CIBT’s revenues decreased 29% YOY to $16 million because of lower development fees as CIBT is currently more focused on executing the developments acquired in 2018.
• Core operations remain healthy as the company reported a 7% YoY increase in educational revenues, and an 8% YoY increase in rental revenues.
• Since our previous update report in May 2019, the budget and scope of GEC® Mega Center (Surrey) was revised from $324 million to $275 million. Closing of the acquisition of land for GEC® Oakridge is expected in January 2020. In June 2019, the company entered into a 21-year head lease agreement with a real estate developer on a residential rental property (GEC® Kingsway) to be constructed in Metro Vancouver. This is the first deal wherein CIBT will manage a third party owned property.
• At the end of Q3-FY2019, the company had $24 million in cash. The debt to capital was at 40% versus a comparables’ average of 61%.
• As we lowered our forecasts for development fees, we are adjusting our FY2019 net profit estimate from $10 million / EPS: $0.13 to $4 million / EPS: $0.05. Note that these figures are net of non-controlling interest.

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