CCP - Credit Corp Group

[ROE]

Nice result I like it very much .... I factor in some margin of safety say earning is 4.3 Mil for 08 ..that give it 10 EPS ..that bring it down to 2003 Earning

But the upside still there and if they do well they could exceed it

 

[dhukka]

oh, ok thanks
so that means the company expects to earn another 4-6million for Npat for first half of 2008?

First half 2008 is history, that is today's result.

in other words, most of the second half profits will be mostly consumed by the restructing cost of 3.5 million?

Basically yes, the company released details of the restructure in their presentation:

*Time Frame 30 -45 days

*Expected costs and/or charges
– Premises (lease tail/make good) $0.8m
– Staff costs $1.85m
– Goodwill & Plant $2.20m

Tough to have faith in these projections given recent events.

eps down -32% dps down -81% suggests to me they are conserving capital in case more cochroaches surface in their strategic review.

This is not encouraging either;

• Investment in larger corporate and administrative platform for forecast
volume increases
• Revenue is expected to increase in the second half of the 2008 financial
year, however not at the rate of costs
• This will contribute to declining profitability in the second half
until costs are reduced and further revenue growth is achieved

 

[TheRage]

The segment information on page 10 says it all really. 8.5 million profit off of 72 million of ledgers equates to a 11.8% return dec 2007, where as in 2006this ratio is double at 21% return. It seems management were spot on but I suspect cost of employees hasn't had as much of an impact as the crappier ledger products that they have purchased.

 

[ROE]

The segment information on page 10 says it all really. 8.5 million profit off of 72 million of ledgers equates to a 11.8% return dec 2007, where as in 2006this ratio is double at 21% return. It seems management were spot on but I suspect cost of employees hasn't had as much of an impact as the crappier ledger products that they have purchased.

Well earning is the same but other figure is different because they are a bigger company now facing problems, so some of the $$ will be used to restructure, sack staff and various other activities.

I prefer a company to come out and said look we are having problems and we are addressing it and this is what it will cost..maybe even over estimate the cost and even going backward for a year or two ....I don't mind as long as they are making progress and get back to core business and start making more money in 2 years time.

You cant pick up wonderful company at cheap price period...it has to go through some sort of earning down grade or problems and as long as the management can get back on track then I'm all in.

But it's a risk so you have weight up and decide whether it's for you or not.

 

[resourceboom]

Hi ROE,
If you don't mind, could you say roughly how much %wise of your portfolio you have / plan to have in CCP.

I know the mods don't like these types of questions, as they will say it irrelevant and should not be discussed, but I think because you have already mentioned going "all in" it would be nice to clarify.

no dramas if you dont want to answer.

 

[ROE]

Hi ROE,
If you don't mind, could you say roughly how much %wise of your portfolio you have / plan to have in CCP.

I know the mods don't like these types of questions, as they will say it irrelevant and should not be discussed, but I think because you have already mentioned going "all in" it would be nice to clarify.

no dramas if you dont want to answer.

Rule 1: Only invest what you can afford to lose
Rule 2: Don't lose capital

Well I put all my profit for the year into this stock, that close 25K worth ..which is small but that all I can afford to lose with my rule #1.

So if things fall to pieces I don't lose capital but my profit.
All in doesn't mean 100% of my capital.

 

[Buffettology]

....I don't mind as long as they are making progress and get back to core business and start making more money in 2 years time.

This is the part that I think is very positive. Management appears to be addressing both issues, on the revenue and the cost side.

They appear to be addressing the problem and getting back to core operations should see a handy profit in a couple years.

Not to mention, in the short-term, this company is EXTREMELLY oversold. Check out RSI, WELL BELOW 30. MACD is not great, but this is a lagging indicator afterall and hopefully we see a bullish crossover in a few days.

 

[chops_a_must]

This is the part that I think is very positive. Management appears to be addressing both issues, on the revenue and the cost side.

They appear to be addressing the problem and getting back to core operations should see a handy profit in a couple years.

Not to mention, in the short-term, this company is EXTREMELLY oversold. Check out RSI, WELL BELOW 30. MACD is not great, but this is a lagging indicator afterall and hopefully we see a bullish crossover in a few days.

That's not very Buffetesque of you!

You would expect at least some kind of technical bounce from here, after that exhaustion. You feel anyone wanting to get out, would mostly be out already. But, it is a most bizarre chart.

From a mug's standpoint it looks like the market is pricing some substantial degree of risk for complete company collapse. Can't see that happening though. Just glad I didn't buy in when I was thinking about them last year...

 

[Buffettology]

That's not very Buffetesque of you!

You would expect at least some kind of technical bounce from here, after that exhaustion. You feel anyone wanting to get out, would mostly be out already. But, it is a most bizarre chart.

From a mug's standpoint it looks like the market is pricing some substantial degree of risk for complete company collapse. Can't see that happening though. Just glad I didn't buy in when I was thinking about them last year...

he he, told you I keep repeating what I am starting to learn over and over and try and relate it to every post! Only way to become competent at it whatsoever (either conciously or unconciously)!

But I agree on the exhaustion and that the market is pricing in a substantial degree of risk! I would expect a bounce from here also, but we might get some resistance in that there are sure to be a LOT of profit takers out there as this one climbs up through that dollar mark.

Definately a medium to long-termer I beleive.

 

[Buffettology]

They appear to be addressing the problem and getting back to core operations should see a handy profit in a couple years.

Oh, and correct me if Im wrong, but though not exactly the same, isnt this a similar situation to what happened when Buffett bought into American Express?

Took on some unprofitable extra activities and Buffett only bought in on the criteria that they get back to their core activities, of which ended up profitable. Man, seems so long ago since I read that, not sure If I'm just talking jibberish!

 

[annalivia]

Oh, and correct me if Im wrong, but though not exactly the same, isnt this a similar situation to what happened when Buffett bought into American Express?

I alluded to this back in post 45 of this thread.
I don't think things were so grim back then. However I am still a believer. ie: this is an outstanding company with some problems to fix and has the potential to recover big time.
I kept buying up on the way down with Uncle Warren in mind whispering to me... "Be greedy when others are fearful."
I think this will either be my best or my worst investment decision.

 

[Buffettology]

I alluded to this back in post 45 of this thread.
I don't think things were so grim back then. However I am still a believer. ie: this is an outstanding company with some problems to fix and has the potential to recover big time.
I kept buying up on the way down with Uncle Warren in mind whispering to me... "Be greedy when others are fearful."
I think this will either be my best or my worst investment decision.

Yeh, sadly though, it will take a long time for you just to recover costs.

Also, you could not have known what was in store for this one.

However, remember Buffett bought into American Express AFTER all this information came out and once it was agreed they would clean up the unprofitable parts of the business. I.e. the time corresponds to this exact time with CCP (after their release yesterday). So far better to buy in NOW as far as that information is concerned, as opposed to buying in over the last few months/years. But you could not have known.

 

[ROE]

Oh, and correct me if Im wrong, but though not exactly the same, isnt this a similar situation to what happened when Buffett bought into American Express?

Took on some unprofitable extra activities and Buffett only bought in on the criteria that they get back to their core activities, of which ended up profitable. Man, seems so long ago since I read that, not sure If I'm just talking jibberish!

No Buffett bought into AA because of the quality of the business... he Admitted that they made a plunder and cost them millions but that plunder can be fixed with better quality control and as he explain it it's a toll bridge business....
as long as people still using the credit, AA will make money every time you swipe that card, a little fee attached to it.

As long as there are credit cards and personal loan, there are going to be people in debt and they need someone to recover it sound too familiar here

The business he bough into where the want it change is the Insurance Business where they start going to far to fast and offer people from all walk of life car insurance. Where their core business before the collapse is only offered to prefer drivers cheap..someone who never has accident or little accident...much like what AAMI did that why I like Promina....target those and give them cheap insurance cos they dont make claim.

Most people preach Graham and Buffett teaching but have no courage to act ...that is to buy when everyone else said jump ship and shout the house is falling down

 

[Snakey]

volumes for me have been low...the increase in debt on the report seems to be concerning investors....direction is unclear... hence i have exited this one.
good luck holders but i have moved my capital to a different bounce trade AED... more solid things happening there IMO

 

[Buffettology]

Thx ROE, I was confusing the two. Either way, its the same scenario as the insurance business then!

Could really be a big upturn in this one in a year or so (if managements strategic plan works, and I see no reason why not).

Glad I bought in, I think its worth the risk and will be holding for the long-term.

Cheers

 

[annalivia]

Can anyone explain the following?

From todays balance sheet and cash flow metrics the Interest Coverage (EBITDA/interest) for the 6 months ended Dec 07 is 7.9x

This seems OK to me.

However after recent developments has this changed and what is the Interest cover now?

and

Is it sufficient?

 

[TheRage]

Can anyone explain the following?

From todays balance sheet and cash flow metrics the Interest Coverage (EBITDA/interest) for the 6 months ended Dec 07 is 7.9x

This seems OK to me.

However after recent developments has this changed and what is the Interest cover now?

and

Is it sufficient?

This is quite rough:
On 140 million debt at lets say 8% interest = 11.2 million. On forecast EBITDA of 83-87million = 83million/11.2 million = 7.4 times.

Someone correct me if I am wrong but the restructuring costs will likely be amortised so will come out after EBITDA and then NPAT will be derived.

 

[annalivia]

This is quite rough:
On 140 million debt at lets say 8% interest = 11.2 million. On forecast EBITDA of 83-87million = 83million/11.2 million = 7.4 times.

Someone correct me if I am wrong but the restructuring costs will likely be amortised so will come out after EBITDA and then NPAT will be derived.

Thanks TheRage.
So if this is approximately right am I correct in assuming that there is no immediate threat to ccp paying their current debt?

and the comment from Snakey.....
"the increase in debt on the report seems to be concerning investors"
is fallacious.

 

[Snakey]

Thanks TheRage.
So if this is approximately right am I correct in assuming that there is no immediate threat to ccp paying their current debt?

and the comment from Snakey.....
"the increase in debt on the report seems to be concerning investors"
is fallacious.

just one thing from the report concerned me was the closing net debt rose from 82 mil in dec 06 to 144 mil in dec 07 an increase of 75%
If I wound the company up tomorrow I would get 69 million... thats is only if the debt ledger are worth what they say there worth.
At 1 dollar the company market cap is 44 million
At $1.56 the company's cap would 69 million
If debt were to increase another 25 percent in twelve months with restructure and continuing problems the company's closing book value would be all but $0.00
I am working only of the ledger value ...any other value I have written off as error allowance.
Please feel free to pick apart my theory as this is what the forum is for

 

[ROE]

just one thing from the report concerned me was the closing net debt rose from 82 mil in dec 06 to 144 mil in dec 07 an increase of 75%
If I wound the company up tomorrow I would get 69 million... thats is only if the debt ledger are worth what they say there worth.
At 1 dollar the company market cap is 44 million
At $1.56 the company's cap would 69 million
If debt were to increase another 25 percent in twelve months with restructure and continuing problems the company's closing book value would be all but $0.00
I am working only of the ledger value ...any other value I have written off as error allowance.
Please feel free to pick apart my theory as this is what the forum is for

Net Tangible Asset usually include liability ie total asset - liability .... some called it book value some called it NTA