CCP - Credit Corp Group

hueyt

I have been watching CCP closely trades since xmas.
-- I have been trying to buy but the SP keeps rising on small parcels by both buyers and sellers.
-- mind you the stock is tightly held!
-- there are 43 million shares and the top 20 own 70% of the shares

Games have been played in early Jan where SP went from 7.90 to 9.75, back to 9.20 and in a number of days back up to 10+
-- Yesterday small parcels (54 share parcels were traded many times) pushing up the SP - refer my note Feb 19
-- Todays action had more itegrity IMHO

Todays ASX $ ann were very good

-- IMHO the current SP is overvalued!

CCP SP has done well today up 59 cents and reaching ALL TIME high currently of $10.89
-- volume is not high today

CCP $10.89 +$0.59 +5.73% 28,202 shares $291,741 20-Apr 13:56:11
-- observed unusual SP transactions in the past!

http://www.intersuisse.com.au/notes/mntuesday.html

Intersuisse on Tuesday, 17 April 2007 recommended for Credit Corp Group (CCP) to "Accumulate"

PLEASE NOTE SP has since dropped
Just noted late trades after first posting above and now edited with SP down to $10.45
14:35:33 10.4500 26 271.70
14:33:40 10.4500 45 470.25
14:33:40 10.4500 1,329 13,888.05
14:32:02 10.4500 291 3,040.95
14:31:43 10.4500 2,000 20,900.00
14:31:43 10.4600 1,000 10,460.00
14:31:43 10.4700 380 3,978.60
14:29:42 10.6100 250 2,652.50
13:56:11 10.8900 155 1,687.95
13:56:06 10.8900 91 990.99
13:56:06 10.8900 254 2,766.06
13:55:45 10.8900 75 816.75
13:52:09 10.6000 17 180.20
13:52:09 10.6000 500 5,300.00

CCP has taken a very big hit today following ASX ANN yesterday after the close

I use to hold!

-4.830 -45.61%

CCP 5.76 -4.830 -45.61% with low of 5.60 4,040,367 shares $24,465,008 @ 08-Nov 12:26:14 PM

CCP 5:03 PM Earnings Guidance Revision
http://www.asx.com.au/asx/statistics/showAnnouncementPDF.do?idsID=00780474

2008 Earnings Guidance Revision
Credit Corp Group Limited (ASX: CCP) advises that its financial year 2008 NPAT is expected to be below previous guidance due to increased costs from growth in employee numbers and infrastructure investments together with a change in the mix of Credit Corp’s portfolio of purchased debt ledgers.

During the first four months of FY08, Credit Corp has experienced margin declines in comparison to the levels achieved in the prior year. Employees recently recruited to service increased ledger purchases in the 2007 and 2008 financial years have not reached anticipated productivity levels as rapidly as expected, resulting in slower revenue growth than anticipated. Further, the productivity of more experienced personnel has been adversely affected by an increased contribution to training and supervisory activities.

The Company's performance has also been impacted by a change in its portfolio mix. Late in the 2007 financial year the Company made the strategic decision not to renew purchases of a particular type of asset due to unsustainably high pricing. This asset had historically produced high short-term returns for the Company. The asset has been replaced with other purchases which, while providing similar overall returns over total asset life, do not provide the same short-term return. Returns from these portfolios are delivered more evenly over time, deferring revenues into future periods.
Investments in infrastructure have been accelerated to accommodate the expanded workforce, including two operational site initiatives. Credit Corp has leased premises in Logan City, Queensland, being fitted out as a new site capable of accommodating over 200 full time employees. In addition, the Company has doubled its capacity at Parramatta, New South Wales, facility providing accommodation for over 200 full time employees. Growth in these two locations will drive Credit Corp’s Australian staff numbers from 405
FTE to approximately 620 FTE, during the 2008 financial year, ensuring appropriately increased capacity.

After fully assessing the cost and asset mix factors contributing to underperformance in the first four months of FY08 and the infrastructure costs required over the balance of the year, the Company has revised its previous full year FY08 NPAT guidance of $24 million to between $17 and $19 million.

Credit Corp’s CEO, Mr Geoff Lucas stated: “We believe it is essential to make timely investments in the Company’s ongoing operations to meet the requirements of future activities as we see significant opportunity for substantial increases in supply of consumer debt into our market. It is, however, disappointing not to have maintained our FY08 earnings growth targets whilst undertaking such a rate of expansion.”

Credit Corp is confident in its long term strategy to deliver NPAT growth in the 2009 financial year.

Is this just a temporary setback, (time to go shopping) or are they doomed ;-(
Ive been really impressed by these guys untill now. Hopefully this isnt a sign of long term problems???

Thoughts ???

mark_au said:

Is this just a temporary setback, (time to go shopping) or are they doomed ;-(
Ive been really impressed by these guys untill now. Hopefully this isnt a sign of long term problems???

Thoughts ???

Click to expand...

Wow... I'd forgotten about these guys. Down almost 50% at the moment. Seems quite a large over reaction to a 20% profit downgrade. Might become a potential yield play in the next few months if they don't write that down. But I certainly wouldn't want to be long.

chops_a_must said:

Wow... I'd forgotten about these guys. Down almost 50% at the moment. Seems quite a large over reaction to a 20% profit downgrade. Might become a potential yield play in the next few months if they don't write that down. But I certainly wouldn't want to be long.

Click to expand...

I knew there was a quite a 'risk" with this sort of company

Earnings and Dividends Forecast (cents per share)
2007 2008 2009 2010
EPS 45.0 56.8 68.9 80.5
DPS 23.0 28.3 35.6 41.4

thx

MS

Sheesh... I suppose this means they'll be even more aggressive chasing the money one of the kids owes them...

GP

This to me is another good example of long/ short trust managed investments getting into this one probably not to disimilar to Aristocrat Leisure in the past few weeks. Fund managers shorting on the likely expectation of further sp decline. It's interesting just because ccp is making the same Net profit as last year but is down 20% from expectation this company is suddenly ruined or so most people think. Look at the ROA on this company when compared with payout ratio on dividends. Company equity has been consistently growing with ROA still increasing. This year ROA will be down but by their own admission their profit has been reduced by an inability to convert new staff into their business process at the same rate. To me this seems like an issue that can easily be solved. I didn't own until today when I bought at 5.58. I have been waiting for an opportunity to jump on this ship and it sailed in for me today.

TheRage said:

This to me is another good example of long/ short trust managed investments getting into this one probably not to disimilar to Aristocrat Leisure in the past few weeks. Fund managers shorting on the likely expectation of further sp decline. It's interesting just because ccp is making the same Net profit as last year but is down 20% from expectation this company is suddenly ruined or so most people think. Look at the ROA on this company when compared with payout ratio on dividends. Company equity has been consistently growing with ROA still increasing. This year ROA will be down but by their own admission their profit has been reduced by an inability to convert new staff into their business process at the same rate. To me this seems like an issue that can easily be solved. I didn't own until today when I bought at 5.58. I have been waiting for an opportunity to jump on this ship and it sailed in for me today.

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Hi do you reckon the US subprime mess will affect this company directly or indirectly or negligible?

thx

MS

michael_selway said:

Hi do you reckon the US subprime mess will affect this company directly or indirectly or negligible?
thx

MS

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Hi Michael,

The majority of CCP's customers are Australian businesses such as banks, corporations etc. CCP is like a debt collector in the simplist sense so it could get exposure to sub-prime if it serviced sub prime organisations such as financial institutions within australia. To be honest the re-rating is probably more to do with what I said above but also due to the comment made within the release about the debt structure that they are no longer using. Not much clarification has been given so their is a question mark about whether their business model could be sustainable.

G'Day to you all,

Here is a link to some info on CCP http://www.clime.com.au/media/copout0806.html

I'm amazed that this reassessment of future earnings can have such an immediate and drastic effect on the share price.

I bought these at $3.00 almost exactly 3 years ago, and am still a believer. When the tough times set in, and debt collection thereby increases because of repayment defaults, business will come flooding in.

Reading the info on the above link, it seems to be money for old rope.

Regards,

Mike

This article outlines how Credit Corp will benefit substantially from any further sub-prime shakeouts.

http://www.theaustralian.news.com.au/story/0,25197,22278654-17164,00.html

I think sellers are wary of any financial stock at the moment. Perhaps also following the old maxim "sell on the first profits warning, buy on the 3rd".

TRex said:

G'Day to you all,

Here is a link to some info on CCP http://www.clime.com.au/media/copout0806.html

I'm amazed that this reassessment of future earnings can have such an immediate and drastic effect on the share price.

I bought these at $3.00 almost exactly 3 years ago, and am still a believer. When the tough times set in, and debt collection thereby increases because of repayment defaults, business will come flooding in.

Reading the info on the above link, it seems to be money for old rope.

Regards,

Mike

Click to expand...

Yep but the ironic thing is that it will be "harder to get debt", people simply cant pay it?

Date: 9/11/2007
Author: Sally Patten
Source: The Australian Financial Review --- Page: 74
Australian-listed Credit Corp has scaled back its profit expectations for the2007-08 financial year. The debt collection group says its profit for the periodwill be within the range of $A17m to $A19m, compared with earlier guidance of$A24m. Credit Corp enjoyed strong growth in net profit and revenue in 2006-07,and it says low staff productivity levels have contributed to the profitdowngrade, as have rising staff costs. Credit Corp is in the midst of asignificant expansion of its workforce, and has hired an additional 100 staff inthe last six months

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thx

MS

Today's SMH

http://www.smh.com.au/news/Business/Clime-to-stick-by-Credit-Corp/2007/11/16/1194766923562.html

Clime to stick by Credit Corp
November 16, 2007 - 11:55AM

Clime Capital Ltd says it will stick to its shareholding in Credit Corp Ltd, despite its shares falling about 50 per cent last week on an earnings downgrade.

Credit Corp became the listed investment company's second biggest shareholding after it downgraded its fiscal 2008 earnings forecast to between $17 million and $19 million from an earlier figure of $24 million.

Sharemarket opportunist David Tweed was notably absent from Clime's annual general meeting (AGM) in Sydney on Friday, having sold out of the company last year, after pestering its board at previous AGMs.

Chairman Roger Montgomery said he would have been more boastful about Clime's financial performance if the AGM has been held two weeks ago, before the Credit Corp downgrade.

"On this occasion the fall came before the pride," he told shareholders.

Mr Montgomery said Clime, which buys large portions of a small number of stocks, likes to hold onto business long term.

"While Credit Corp's share price has halved, its revenues won't miss a beat," he said.

"Revenue will grow by 30 per cent in 2008 driven by a perfect confluence of drivers."

It may take some time, however, for the market to recognise Credit Corp's value he said.

"Fund managers have a long memory and once they have been bitten once, they will remain twice shy."

Clime did not provide any earnings guidance for fiscal 2008.

Fiscal 2007 net profit rose 98 per cent to $17.4 million.

Clime shares fell 0.5 of a cent to $1.38. Credit Corp shares added nine cents to $6.24.

1) Director Simon Calleia buys 18,500 shares on-market for $105,330 (= $5.69/share) since the earning downgrade.
2) Investors Mutal has been topping up lately.
3) Current guidance of $17-19m (revised down from $24m on 7th Nov 2007) equates to 40.1cps based on 44m shares. PE = 10.4 (at sp of $4.20)

I am buying up these shares bigtime.

Perhaps most importantly you should be aware that CCP’s profit is an accounting construct, dependent on the amortisation rate applied to the ledgers. While analysts will focus on the profit reported to shareholders, an owner would be more concerned with cash flow or ‘owner’s earnings’. I estimate 1) the business is producing operating cash flows after financing costs of circa $20 million per quarter and 2) the ledger book has grown by almost 25% since the last report. The face value of the ledgers today is
$2 bln. and one has to remember that even if no new ledgers were purchased, the face value of the book would rise by about 10% per annum due to the interest accruing on the outstanding balance (subject of course to absent collections, discounts given and ageing past statutory barriers).
This company is not losing money - Staff are the key to this business and apparently Credit Corp is the best company in the industry to
be employed by.

It's been on a down trend for ages never break new high...every new high is lower new high...

Good stock I agree I was going to come in around $5 but I spot the trend so I sit on the side line.....until the trend changes I stay out

Cant beat technical backed by fundamental research

annalivia said:

I am buying up these shares bigtime.

Perhaps most importantly you should be aware that CCP’s profit is an accounting construct, dependent on the amortisation rate applied to the ledgers. While analysts will focus on the profit reported to shareholders, an owner would be more concerned with cash flow or ‘owner’s earnings’. I estimate 1) the business is producing operating cash flows after financing costs of circa $20 million per quarter and 2) the ledger book has grown by almost 25% since the last report. The face value of the ledgers today is
$2 bln. and one has to remember that even if no new ledgers were purchased, the face value of the book would rise by about 10% per annum due to the interest accruing on the outstanding balance (subject of course to absent collections, discounts given and ageing past statutory barriers).
This company is not losing money - Staff are the key to this business and apparently Credit Corp is the best company in the industry to
be employed by.

Click to expand...

You are assuming people will always repay... most people in this situation can just ignore you all together and dont pay because once they reach this state they are probably already in the sh**t with other debt collectors as well.

But based on past performance this is an exceptional company and I like to buy but I have to give myself plenty of margin of safety

annalivia said:

I am buying up these shares bigtime.

Perhaps most importantly you should be aware that CCP’s profit is an accounting construct, dependent on the amortisation rate applied to the ledgers. While analysts will focus on the profit reported to shareholders, an owner would be more concerned with cash flow or ‘owner’s earnings’. I estimate 1) the business is producing operating cash flows after financing costs of circa $20 million per quarter and 2) the ledger book has grown by almost 25% since the last report. The face value of the ledgers today is
$2 bln. and one has to remember that even if no new ledgers were purchased, the face value of the book would rise by about 10% per annum due to the interest accruing on the outstanding balance (subject of course to absent collections, discounts given and ageing past statutory barriers).
This company is not losing money - Staff are the key to this business and apparently Credit Corp is the best company in the industry to
be employed by.

Click to expand...

Don't worry ROE, annalivia is obviously not bright enough to come up with his/her own analysis. Why else would he/she plagiarize CAM's October NTA report and post it here changing a couple of key words to make it look like his/her own? See attachment end of page 2 and start of page 3. I guess you get desperate when watching the value of your investments tumble.