CCP - Credit Corp Group

[McLovin]

Anyone know why this stock is getting pounded today? Down over 8% as I write. At these prices I'm about to add to my holding in CCP.

 

[VSntchr]

Anyone know why this stock is getting pounded today? Down over 8% as I write. At these prices I'm about to add to my holding in CCP.

Hello McLoving, any chance of superbad 2 anytime soon? haha

CCP is pretty illiquid, so the fact that a major shareholder has been dumping their stock is possibly a part of an explanation.

Another thought is something to do with the credit reform laws? I know that CCV specifically has been copping a hiding lately for this reason..

 

[McLovin]

Hello McLoving, any chance of superbad 2 anytime soon? haha

Patience young Skywalker, good things come to those who wait! : McLovin was the first thing that came to my head when I was signing up!

CCP is pretty illiquid, so the fact that a major shareholder has been dumping their stock is possibly a part of an explanation.

Another thought is something to do with the credit reform laws? I know that CCV specifically has been copping a hiding lately for this reason..

The selldown by a large shareholder is what I suspected, and loaded up this afternoon.

Wrt to the credit reform green paper, I think that effects CCV to a much greater extent because it is trying to stamp out a lot of the usury lending that "Pay day" lenders tend to be involved in. I haven't seen much about how it will effect PDL companies like CCP.

 

[Intrinsic Value]

I plugged in my valuation for Credit Corp over the weekend and came up with 5.70.

At todays price of 4.40 it is looking not too bad.

 

[McLovin]

I plugged in my valuation for Credit Corp over the weekend and came up with 5.70.

At todays price of 4.40 it is looking not too bad.

I have them at a similar price for this year rising to around $6.50 next year.

 

[ROE]

got some more at $4.30 during the panic week just before Uncle Don load up some more ..expecting 30c dividend in the near future ...maybe 18 months down the road

 

[ROE]

my limit order got triggered at $4.95, first time buyer. I hope she's a keeper

Don't worry too much about Mr Market share price offering each day
at $4.95 not as cheap as $4.30 I got but still cheap in my book and give you
a margin of safety...

CCP since the debacle some years ago has always been under promise and over deliver

When they tell you things are looking bad or debt purchase getting more competitive
wait for the sell down then load up

if things are bad for CCP it will be worse for their rival because CCP has a magic weapon, CCP has technology advantages which they invest a bit of money into.

Just like Dominos and their use of technology with their online ordering
this set them apart from everyone else .... Dominos online sale now account for
25-30% of their sale... I dont think I use the Phone again ordering Pizza

Some day their rivals may catch up or they may not but until then these technology will keep them ahead of their rival.

 

[Math]

Under $4 and down 30% since May, how are those valuations looking now ?

 

[robusta]

Under $4 and down 30% since May, how are those valuations looking now ?

Bloody excellent, I think I need to buy some more.

 

[ROE]

Under $4 and down 30% since May, how are those valuations looking now ?

At this price you pricing a growing business with no grow or a decline earning for a year or two

A business with high return on capital employed and generous cash flow.

This business is at its best shape since listing with little debt and crazy free cash flow.

I did buy more at $3.85 or so ....

There are many stocks I regularly topped up as long as it is cheap in my book
and I collect future years dividend stream....this get crazily good during a crash
when people either bailed out or don't want to join in or waiting for something

I just folow George Clason wisdoms
save part of your earning and invest wisely in all cycles, the cheaper the market
the better the future dividend stream

like someone used to say you make the most money in the bear market you just don't know it at the time
I didnt know it when I bought CCP at $1

 

[Intrinsic Value]

At this price you pricing a growing business with no grow or a decline earning for a year or two

A business with high return on capital employed and generous cash flow.

This business is at its best shape since listing with little debt and crazy free cash flow.

I did buy more at $3.85 or so ....

There are many stocks I regularly topped up as long as it is cheap in my book
and I collect future years dividend stream....this get crazily good during a crash
when people either bailed out or don't want to join in or waiting for something

I just folow George Clason wisdoms
save part of your earning and invest wisely in all cycles, the cheaper the market
the better the future dividend stream

like someone used to say you make the most money in the bear market you just don't know it at the time
I didnt know it when I bought CCP at $1

Excellent value at current prices.

Hard to see how you can go wrong with CCP under 4 dollars.

 

[ROE]

Result out tomorrow keep an eye out for it folks

share price close today indicates it should be a nice one.

I expect more profit and more dividend.

they suspend the DRP so they got too much cash ...please hand it back to me via more dividend so
I can allocate it some where else

 

[robusta]

Result out tomorrow keep an eye out for it folks

share price close today indicates it should be a nice one.

I expect more profit and more dividend.

they suspend the DRP so they got too much cash ...please hand it back to me via more dividend so
I can allocate it some where else

I will be reding with interest ROE, if current trends continue the cash flow should be something special.

 

[ROE]

Result out

Upper end and slightly exceed guidance
more debt pay down with increase PDL purchase (very nice)
ROE back to awesome level 22%

2012 Guidance
-------------
increase dividend payout
More growth

Like I said you paying a growing business that the market price for no growth or worse.

 

[VSntchr]

Result out

Upper end and slightly exceed guidance
more debt pay down with increase PDL purchase (very nice)
ROE back to awesome level 22%

2012 Guidance
-------------
increase dividend payout
More growth

Like I said you paying a growing business that the market price for no growth or worse.

Agree ROE, very happy with this one. Dividends paid in 2011 ($6.7m) have tripled that paid in 2010 ($2.2m).

 

[craft]

Who can explain note 11 from the financials to me? Althought it's not really clear to me, I know it is very important because although Interest revenue from purchased debt ledgers is only reported as one line it is actually made up from receipts from collections less amortisation of purchased debt ledgers based on assumptions disclosed in note 1 & 11.

The assumptions dictate the amortisation amount which dictates the reported profit. This company has more scope than most to convert capital to current yield which can make the figures look really good for a for years but eventually needs to be reconciling by a doozy of a year. Sort of sounds familiar doesn’t it.

I’m not saying it’s happening again, I just wondering how people are ensuring themselves that it’s not.

On the bright side lower debt for this company is a huge positive in case there ever is another need to reconcile the accounting amortisation rate with a higher actual rate of impairment.

 

[McLovin]

Who can explain note 11 from the financials to me? Althought it's not really clear to me, I know it is very important because although Interest revenue from purchased debt ledgers is only reported as one line it is actually made up from receipts from collections less amortisation of purchased debt ledgers based on assumptions disclosed in note 1 & 11.

The assumptions dictate the amortisation amount which dictates the reported profit. This company has more scope than most to convert capital to current yield which can make the figures look really good for a for years but eventually needs to be reconciling by a doozy of a year. Sort of sounds familiar doesn’t it.

I’m not saying it’s happening again, I just wondering how people are ensuring themselves that it’s not.

On the bright side lower debt for this company is a huge positive in case there ever is another need to reconcile the accounting amortisation rate with a higher actual rate of impairment.

There PDL's seem to be more conservatively valued now than previously. Thier actual amortisation as a % of PDL revenue has risen to ~46% from ~40% in 2007. Further, looking at the cashflow statement and balance sheet, in 2007 they had PDL's valued on their books at $184m which were generating OpCF of $76mln, today they have $146m in PDL's generating OpCF of $119m. Of course there will always be some black box about how management value these assets, but to me it seems as though they have become far more conservative.

I also took heart in the fact that management is has made statements to the effect that they will not overpay for PDL's in the face of increasing competition.

Solid result, IMO.

 

[craft]

Hi McLovin

Thanks

I feel timing of PDL purchases and maturity profiles make the OCF/PDL asset and amortisation/revenue rough guides at best. This has got to be one of the hardest businesses for an outsider to make judgements on the quality of the result. I wonder if their problems of the past were because insiders couldn’t even get a handle on actual impairment rates.

I also took heart in the fact that management is has made statements to the effect that they will not overpay for PDL's in the face of increasing competition.

Solid result, IMO.

Shouldn't this objective be a given? But like investing it's only in hindsight that you will truely know if you have overpaid.

I think holding this one demands some level of TA as an additional layer of risk management to counter the unavoidable lack of transparency in the FA. Unless of course, you trust management implicitly. It's not one that I would be willing to fade the chartist's on.

 

[McLovin]

Hi McLovin

Thanks

I feel timing of PDL purchases and maturity profiles make the OCF/PDL asset and amortisation/revenue rough guides at best. This has got to be one of the hardest businesses for an outsider to make judgements on the quality of the result. I wonder if their problems of the past were because insiders couldn’t even get a handle on actual impairment rates.

You're correct, they will, because of the nature of the businees, be rough guides. However, if you look at the 5 year history of the company, this has been improving since bottoming out in 08. Also, the problems in the past were very much related to people management. They took on a lot of PDL's which they probably overpaid for (and used debt) and then took on a lot of new staff to collect the outstanding debts at the same time they lost a lot of existing staff members so the "business knowledge" was lost. It can take 12 months to train someone to work efficiently at debt collection and because they had high staff turnover their average amount collected/FTE fell substantially; in 2008 it got as low as $179/hour/employee and probably averaged around $200, this year it has been averaging $238/employee/hour.

There is a 5 year summary on p74 of the annual report, which shows the trend nicely. Growing OCF, more conservative PDL valuation (with the usual caveats discussed), falling debt, and a nice portion of their revenue coming off payment arrangement customers.

Shouldn't this objective be a given? But like investing it's only in hindsight that you will truely know if you have overpaid.

Often it is a given, which is when accidents happen. Gauging management conservativeness is never an easy thing to do though.

I think holding this one demands some level of TA as an additional layer of risk management to counter the unavoidable lack of transparency in the FA. Unless of course, you trust management implicitly. It's not one that I would be willing to fade the chartist's on.

I prefer to use a margin of safety as my additional layer, but if TA works for you then go for it.

 

[ROE]

Often it is a given, which is when accidents happen. Gauging management conservativeness is never an easy thing to do though.

I tend to favor management that has their skins in the game and I
100% have faith in them to do the right thing...

With Uncle Don and Uncle Simon hold 2 million shares a piece it's not small amount of
money so I'm sure they want to grow their share portfolio like any of us.

Other Uncle I like that has skin in the game is Uncle Graham from Flight Centre
Uncle Con from Centrebet , Uncle Peter and various directors from Cash Converter...

I buy up all these business where I identified management has big stake in the business and their fortune depend on the success of the business...