CCP - Credit Corp Group

bigdog said:

persistentone

"The largest part of the difference appears to be due to impairment."

There was a note on impairment on the second CCP ANN today on page 9
-- refer the attachment

http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=00954826

Credit Corp Upgrades Guidance
http://www.istockanalyst.com/article/viewiStockNews/articleid/3239212

Sydney - Wednesday - May 20: (RWE Australian Business News) - Receivables management company Credit Corp Group Ltd (ASX:CCP) today reported continued strong performance over the four months to April.

Further improvements in operational effectiveness mean that the company is on track to deliver the upper end of its net profit guidance issued in February while exceeding the earnings before interest, tax, depreciation and impairment (EBITDA) guidance issued at the same time.

Directors also provided updated full-year guidance to June 30.

In the 10 months to April (year to date) unaudited EBITDA was $79.8m and net profit $9.7m on revenue of $128.3m while basic earnings per share were 22.16c.

Updated full-year 2009 guidance is for EBITDA of $93m-95m, a net profit of $10m-11m and basic EPS of 23-25c.

For the 12 months ended June 30 the company achieved $85.72m EBITDA, a $5.36m net profit and basic EPS of 12.29c.

Directors said the company was on track to achieve a record EBITDA result for the full year despite relatively modest purchased debt ledger (PDL) purchasing, indicating that operational improvement initiatives and overhead reductions implemented over the past year were delivering sustained positive results.

The company continued to maintain its disciplined approach to PDL acquisitions, after increasing its monthly rate of purchasing by 70pc against the first half of the year. The average result for all recent purchases continues to meet Credit Corp's minimum return hurdle.

Further improvements in collection operations remain the key driver of favourable performance.

The returns from older PDLs continue to improve, with the proportion of total revenues collected from PDLs acquired more than two years ago increasing from 21pc in the March 2008 quarter to 43pc for the four months to April 2009.

Despite the increased focus on older PDLs, direct collection staff productivity of $227 per hour was achieved in the period, an increase of 20pc.

In line with the increase in purchasing, the company has grown its collection workforce by 24 Full Time Equivalent (FTE) staff to 406.

The company is on track to grow its collection workforce to 430 FTE by June.

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So why would *better than expected revenue* drive impairment expenses higher? Better collection / revenue implies less needs to be impaired?

There is something basic about their business model and how they take impairments that I simply don't understand (yet).

Has anyone found a person in Credit Corp who will actually respond to investor questions? Please post their contact details if yes.

What would explain today's rise in Credit Corp? The insider buying from last week doesn't seem like big news, and the volume today isn't that much.

It looks like this stock moves on the smallest of volumes.

persistentone said:

What would explain today's rise in Credit Corp? The insider buying from last week doesn't seem like big news, and the volume today isn't that much.

It looks like this stock moves on the smallest of volumes.

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They cracked a new 52 week high that usually brings the punters out.
The fact directors keep buying large parcels is interesting.
I think this is in the process of being let out of the sin bin.

CLH is also starting to make the right kind of noises so it looks like it could be a sector thang.

Has CCP given any forward guidance on the dividend? I'm seeing four cents last year, and on the cash flow statement it is clear they could pay out much more dividend and still be using most of free cash flow to pay down debt.

What is their general guideline on the percent of free cash that they would like to pay as dividend? When they cut back the dividend did they give any guidance about what conditions would need to be met to increase dividend?

persistentone said:

Has CCP given any forward guidance on the dividend? I'm seeing four cents last year, and on the cash flow statement it is clear they could pay out much more dividend and still be using most of free cash flow to pay down debt.

What is their general guideline on the percent of free cash that they would like to pay as dividend? When they cut back the dividend did they give any guidance about what conditions would need to be met to increase dividend?

Click to expand...

their policy in general is they pay a fair amount out in dividend when they are
comfortable with earning, balance sheet and future debt purchase
just sick back and drink coffee and enjoy life and before you know it
it could be the next market darling when the bull charge back in

Yeh, this one is looking extremelly solid.

On a healthy path to recovery.

Reckon most of us recent buyers would be well ITM at the moment.

Cheers ROE and keep up your good analysis.

MRC & Co said:

Yeh, this one is looking extremelly solid.

On a healthy path to recovery.

Reckon most of us recent buyers would be well ITM at the moment.

Cheers ROE and keep up your good analysis.

Click to expand...

Recent buyers would definitely be in the money.

I was very keen to add this and IMF to my portfolio...unfortunately a lack of capital has kept me at bay.

ROE + MRC...do you think there is still scope for $$$ to be made off this? Or has the run up and majority of profits been achieved? I see that it is basically in unchartered territory (due to the 2 massive downgrades and falls) so it's hard to see what will happen in this period...but it just seems like i'm a little too late.

Would appreciate further analysis/answers!

Thanks

JTLP said:

Recent buyers would definitely be in the money.

I was very keen to add this and IMF to my portfolio...unfortunately a lack of capital has kept me at bay.

ROE + MRC...do you think there is still scope for $$$ to be made off this? Or has the run up and majority of profits been achieved? I see that it is basically in unchartered territory (due to the 2 massive downgrades and falls) so it's hard to see what will happen in this period...but it just seems like i'm a little too late.

Would appreciate further analysis/answers!

Thanks

Click to expand...

Every man should investigate and decide whether it's one cup of tea to buy into a certain business..

I try to buy something that I think worth a fair bit more than Mr market quote it daily on the stock market.....and I hang on to it for a long time...

What I hope to achieve is build a portfolio that deliver me regular dividend stream which in turn allow me to buy more great business or increase stake in certain business I see fit..

Regarding the stock over price or fair price is some what subjective as different people has different analysis and use different numbers and variable...and if you ask for my opinion, no this stock is not over price and I think it has some way to go yet...it's scary to see something going from 40 cents to $1.50 in less than a year but that the way Mr Market work...it devalue a company from $13 to 40 cents in less than a year too.

and remember nothing is a sure thing with Mr Market mood swing....if you don't understand or unsure and want to get out and take profit don't let other people opinion cloud your judgments

and I unlikely to post up too many more of my analysis on the forum now that I don't have much time and have my own fund to run ... I be spending more time digging through annual reports of unlove and out of favor companies and future market darling

There are a few outstanding out of love company and if I don't spend time on these now I could missed out nice return 5-10 years from now..

Good luck with CCP

ROE said:

Every man should investigate and decide whether it's one cup of tea to buy into a certain business..

I try to buy something that I think worth a fair bit more than Mr market quote it daily on the stock market.....and I hang on to it for a long time...

What I hope to achieve is build a portfolio that deliver me regular dividend stream which in turn allow me to buy more great business or increase stake in certain business I see fit..

Regarding the stock over price or fair price is some what subjective as different people has different analysis and use different numbers and variable...and if you ask for my opinion, no this stock is not over price and I think it has some way to go yet...it's scary to see something going from 40 cents to $1.50 in less than a year but that the way Mr Market work...it devalue a company from $13 to 40 cents in less than a year too.

and remember nothing is a sure thing with Mr Market mood swing....if you don't understand or unsure and want to get out and take profit don't let other people opinion cloud your judgments

and I unlikely to post up too many more of my analysis on the forum now that I don't have much time and have my own fund to run ... I be spending more time digging through annual reports of unlove and out of favor companies and future market darling

There are a few outstanding out of love company and if I don't spend time on these now I could missed out nice return 5-10 years from now..

Good luck with CCP

Click to expand...

Thanks for that.

And don't stop posting your analysis and insights on companies...it is greatly appreciated!!!

JTLP, agree with ROE, I cannot give you advice, but FWIW, I am still holding this one (as I believe we could see much higher prices yet in the longer-term, 12 months +). Though I would not be surprised to see a pullback after it's recent run.

I will wait for the final year statements and then re-assess the situation.

ROE good luck with your fund, make sure you keep us in the loop with your analysis still, even if it is less often than before.

Cheers

ROE said:

their policy in general is they pay a fair amount out in dividend when they are
comfortable with earning, balance sheet and future debt purchase
just sick back and drink coffee and enjoy life and before you know it
it could be the next market darling when the bull charge back in

Click to expand...

Sorry to go off topic but ROE, it says you have exceeded your private messages quota so I couldn't give my reply to you. It says you need to clear some space.

MRC & Co said:

JTLP, agree with ROE, I cannot give you advice, but FWIW, I am still holding this one (as I believe we could see much higher prices yet in the longer-term, 12 months +). Though I would not be surprised to see a pullback after it's recent run.

I will wait for the final year statements and then re-assess the situation.

ROE good luck with your fund, make sure you keep us in the loop with your analysis still, even if it is less often than before.

Cheers

Click to expand...

No problems MRC I know the rules : Wasn't asking for advice either...just wanted to see where you see it currently. Just looking for LT holds and this one could be the goods (with a little research of course!).

Cheers

JTLP

Under ASX rules, when a company does a share buyback, how many days after a specific buyback does a company have before it has to file and disclose the buyback?

I'm kind of surprised that CCP didn't fall immediately after today's press release. They claim that they are delaying repayment of a credit line (which is good) but will have to pay higher interest and endure additional covenants (which is bad). They try to dismiss the interest and covenant changes as not material, but absent a specific disclosure I wouldn't view that as positive.

Market seem to go a bit crazy lately....
All the faithful CCP who bought it last year would double their money by now
Heck FLT double/triple it in less than 3 months

SP $1.81 down 3 cents @ 10:57 AM

ASX ANN
18/08/2009 FY2009 Results Presentation
http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=00978267

Media Release
Tuesday 18 August 2009

Highlights
Directors of Credit Corp Group Limited are pleased to report a strong performance for the year to 30 June 2009. Continued improvements in operational effectiveness have produced a result at the upper end of the Company’s Net Profit After Tax (‘NPAT’) guidance issued in May 2009 while exceeding the Earnings Before Interest Tax Depreciation and Impairment (‘EBITDA’) guidance issued at the same time.

The Directors advise of the declaration of a final dividend of 2 cents per share.

FY2009 Financials

PDL acquisitions down 52% to $37.2m - (Guidance $35-40m)
Revenue (3) up 8% to $155.8m
EBITDA (2),(3) up 12% to $97.4m - (Guidance $93-95m)
NPAT (1),(2) up 3% to $10.7m - (Guidance $10-11m)
EPS (basic) (1),(2) up 2% to 24.26cents (Guidance 23-25cents)
ROE (1),(2) down 1pt to 15%
Dividend (full year fully franked) steady at 4 cents/share

(1) Excludes profit on sale of process serving business of $0.7m – sold Feb 09
(2) Prior year comparative is pre-restructuring costs
(3) Revenue and EBITDA from continuing operations

Performance Commentary
The Company has achieved record EBITDA, with growth of 12% over the prior year. This is despite a 52% reduction in PDL purchases. Operational improvement initiatives and overhead reductions have delivered sustained improvement over the course of the year.

The Company continues to maintain its disciplined approach to PDL acquisitions, after increasing its rate of purchasing over the second half of the year by 80% against the first half. The average result for all purchases made during the year continues to meet the Company’s minimum return hurdle.

Improvements in collection operations remain as the key driver of favourable performance. Returns from older PDLs continue to improve, with the proportion of revenues collected from PDLs acquired more than 2 years ago increasing from 25% in the June 2008 quarter to 50% in the June 2009 quarter. Despite the increased focus on older PDLs, direct collection staff productivity of $233 per hour was achieved in the final quarter, an increase of 10% over the same period in the previous year.

In line with the recent increase in purchasing the Company has grown its collection workforce by 30 Full Time Equivalent (‘FTE’) staff, or 7%, to 435. While this increase in recruitment will suppress reported productivity it will accelerate collections from the Company’s portfolio of new and existing PDLs.

As previously reported, the Company recorded a relatively high PDL impairment expense for the year. This is due to the impact of a number of factors including above-forecast collection revenue and modest levels of purchasing, together with a revision of future collections to account for the impact of projected increases in unemployment associated with the economic downturn. Unless collection revenues continue to exceed forecast, rates of PDL impairment are expected to return to lower levels.

Financial Position
Sustained operational performance over the year has further strengthened the Company’s financial position. Free cash flow of $44.3m was generated, reducing net bank debt by 35% to $81.2m. This brings the Company’s gearing measured by net debt as a proportion of the carrying value of its PDL portfolio to 47.7%.

This is the lowest level of gearing experienced by the Company since introducing debt funding into its capital structure during the 2004 financial year.

bigdog said:

SP $1.81 down 3 cents @ 10:57 AM

ASX ANN
18/08/2009 FY2009 Results Presentation
http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=00978267

Click to expand...

Overall a pretty decent report, and they continue to impress me with their good management skills.

Has anyone seen a specific disclosure about what interest rate they are now paying on their reset credit lines? It would be good to see how much higher their interest costs are now than in the past.

Huge jump in profit and the share price barely moves - in fact, it went down!? Im just glad i've finally broken even...18 long months since the Crash of Feb '08!

Hello all, pretty new to posting on these forums but plan to try to contribute more regularly.

I have been passively watching CCP for a few months and have finally had a quick look at their numbers. The thing that struck me was the company's impressive cash flow generation and conservative capital expenditure. Free cash flow, not accounting earnings, is what determines the true value of a company. Credit Corp has also demonstrated in the past that it can reinvest this cash at a high rate of return on equity. Here is my first look Discounted Cash Flow calculation based on very conservative numbers. I didn't read into any reports too far so my results could be WILDLY exaggerated.

Inputs/Assumptions:

- Free Cash Flow (from FY09 Results Presentation): $44,300,000.
- Assumed no growth whatsoever.
- Discount rate (plucked it out of my head...its pretty conservative ): 16%

Based on the numbers above CCP should be trading with a market cap of $276,875,000 and a stock price of $6.25.

Today it closed at $1.90 with a market cap of $84,090,200.

I will definitely be researching this stock further.