CCP - Credit Corp Group

[tinhat]

Yesterday CCP hit the 38.2% retracement level of the near-death-experience 2009 low of $0.39 to the $13.61 high of July this year. It is now at the same price it found support at during the 2013/14 retracement and near the price I recently re-bought in at ($8.98). Which way will it go? Interestingly, the Reuters Thompson analyst consensus forecast of $11.63 has not changed and seems like fair value to me. Is this a case of the price overshooting to the up and downside or does Mr Market know something I don't? Handy dividend yield at this price with franking credits.

 

[Triathlete]

There is a strong support level around this $8.50 level.

Provided it can hold above this level which is also the 50% retracement level of the $3.56 low on the week ending 25/11/2011 and the $13.61 high on the week ending 31/7/2015 which was also an impulse wave 3 which is usually the safest wave to trade on.

I would expect the stock to eventually turn and start it's move higher for the final wave 5.

It is currently in a corrective wave 4 still has not broken through the down trend line so still time to get in when the time is right.

I will be watching with interest.

Fundamentally Lincoln indicators has a current valuation of $11.96 and a consensus target of $11.34

 

[Rainman]

... [W]hy would I have my money exposed to the market for 12 months to make 30% return when I could understand the direction and take a position to suit and make it in 6 months.

I'd really like to see these 30% returns each 6 months (which is a 60% return annualized) that you say that you are getting from using a TA strategy.

 

[Triathlete]

I'd really like to see these 30% returns each 6 months (which is a 60% return annualized) that you say that you are getting from using a TA strategy.

Maybe you can work it out for me....Go back through the forum I joined in Nov 2014.Take a look at the calls I made on WOW,CBA,BHP,CAJ,CCP,TLS and see what returns could have been made at the time I made the calls.

 

[Rainman]

Maybe you can work it out for me....Go back through the forum I joined in Nov 2014.Take a look at the calls I made on WOW,CBA,BHP,CAJ,CCP,TLS and see what returns could have been made at the time I made the calls.

Just so that I'm clear, you're saying that:

1. you want me tell you want your actual returns are;
   
   
2. your investment record extends from November 2014 to now; and
   
   
3. 11 months is the timeframe by which we are to be persuaded that your strategy delivers you 60% annualized returns.

Is that what you're saying?

 

[Ves]

Maybe you can work it out for me....Go back through the forum I joined in Nov 2014.Take a look at the calls I made on WOW,CBA,BHP,CAJ,CCP,TLS and see what returns could have been made at the time I made the calls.

Ok. Took me 2 hours but I've gone through all of these threads. And my understanding is as follows.

The problem is you used a lot of language like "I think" "This could" "This might" "The chart says" rather than "I have" "I did" etc. So the trades themselves are probably hypothetical. Most of it was discussed in the context of probabilities, not actions. Discussions amongst fellow chartists, not actual trades.

I can't find any mention of using stop losses. So for the purpose of this exercise I will assume it's the pretty standard, say 8%, because your comments indicate you hate being in trades that go the wrong way.

So... in no order. Your posts are time stamped, and usually after the close. So I took the next trading day's open to initiate all trades where it wasn't clear. Here are the hypothetical trades I come up with as a person reading your posts (in hindsight of course).

WOW

You had some really good analysis in this thread. I'll say that upfront. But as tech/A always says application and theory are two different things. It's hard from your posts to figure out what you actually did (if anything).

(post 453) you had a price target of $29, and looks like you shorted (Trade #1). Market price was $31.00 on the next open (21/11/2014).

On 17/12/2014 price hit a low of $29.11. We'll pretend you accurately caught the low (unlikely in reality).

(post 462) You mention that there should be a small bounce to $34-37 area, so assume you went long again (conveniently for the exercise this is where you'd closed the short). Again finding it hard to keep up, as no actual trade details were confirmed.

Trade #2 Long 18/12/2014 at open $29.61. Price hit $34.32 on 24/2/2015. This is the best case of the $34-37 target zone. So I'll assume you sold here. No mention of this in thread, so I'm being kind again.


(post 593) You mentioned you were sitting on the sidelines (early March 2015) - must not have done much since Feb 2015? (Which fits in above with closed long trade #2)

post 634 you allude to down-trend, but say no hurry to jump in yet (long), no mention of shorting
post 637 you say it will probably go to around $26 (which you called "worst case" later - post 645) & post 640 call it a "falling knife"

I will say you shorted here. Trade #3 12/5/2015 short at open $27.20.

post 680 you say the bottom is probably in - no further posts once it hovered around $26 so trade must have been closed.

Close 21/8/2015 $26.01 - the exact low. Again generous.

I couldn't pick out any further trades for WOW.

CBA

(Post 502) - you said LT W3 (sub wave 4) target $102 - it doesn't look like you made a buy / sell decision, due to unclear wave analysis, also see (post 504)

(Post 512) - you're now claiming to have got out at $93.90 but you never said where you got in??? Price at this date was $82.53 not $93.60

Trade #4 We'll say you went long at post 502 when the price 26/11/2014 opened at $79.6277. Again generous. And closed it at $93.60 (I've got no idea which date).

BHP

(post 2451) - you said it will fall to the $20-24 level, so assuming you went short here.

Trade #5 Short 21/1/2015 open $25.2774

But BHP went to $30 and paid a dividend before it ever went under $25 again (Jul 2015). I guess you got stopped out.

Short closed with stop 8% on 3/2/2015 at $27.30 (8%)

I can't see any mention of this trade being re-entered at the top or any where in between.

CAJ

Up front I will say I'm not sure you can actually borrow stock to short CAJ.

Looks like in (post 33) you said it will likely bounce from here.

Trade #6 Long 11/9/2015 open $0.60.

(Post 34) You indicate that it went the opposite way and broke support. So I'll call this stopped out on 30/9/2015 at $0.55.

Looks like from (post 34) you would go short here.

Trade #7 Short 4/10/2015 open $0.54

No mention of closing it. So I'll take the closing price 29/10/2015 and say you closed it there at $0.41.


CCP

(post 565) You mention a target price of $8.25 to $8.50. I guess this means short.

Trade #8 Short 2/10/2015 $9.43

Unfortunately from here the price went back to as high as $10.24. So I'll stop you out at $10.19 which is the 8% loss level.

No more trades mentioned after this date for CCP.

TLS

(post 1770) first post in thread when price was $6.00 (I'll assume you went short) - (post 1813) you said it'll hold $5.70 so I suggest this was the target, also refer earlier chart
Trade #9 9/6/2015 Short Open $6.00

The price subsequently went as high as $6.53 on 4/8/2014. Which is just over 8%, so we'll say it got stopped here.

In summary:

Trade 1 6.10%
Trade 2 16.30%
Trade 3 4.37%
Trade 4 17.92%
Trade 5 -8.00%
Trade 6 -8.33%
Trade 7 24.07%
Trade 8 -8.06%
Trade 9 -8.12%

Average win 4.03%.


From your posts I've got no idea where the 30% return comes from. Maybe I've missed something?

 

[Klogg]

Ok. Took me 2 hours but I've gone through all of these threads. And my understanding is as follows.... (Rest of quote removed)

Hahaha, I love it.
Thanks Ves, your post made my day

 

[Rainman]

Maybe you can work it out for me....

Ok. Took me 2 hours but I've gone through all of these threads. And my understanding is as follows.

And here I was thinking Triathlete's challenge was merely a rhetorical question.

 

[Value Hunter]

I topped up my holdings and bought a some more Credit Corp shares earlier this week at $8.66. Averaging down is fun

 

[Triathlete]

From your posts I've got no idea where the 30% return comes from. Maybe I've missed something?

Your right Ves..

My quote of 30% comes from my own trading of CBA and ANN first bought 30/6/2014 and
TLS from 23/12/2014. These are stocks I had mentioned in my blog posts.:

 

[VSntchr]

If I recall correctly you had some great charts/analysis tracking CCP PDL profitability - also wouldn't mind seeing them again.
Cheers

Updated as of FY15 results.

Amortisation compared to the carrying value of the PDL portfolio.


Here is a chart showing PDL purchases compared to the amortised value on an annual basis.


For a different perspective, this chart shows the actual collections CCP has made against the amortisation.



Finally, here is a chart which shows that CCP has been increasing recurring revenue since 2007 by increasing the proportion of customers on payment plans.

 

[bigdog]

The market liked todays ASX ANNs

CCP $9.850 +$1.200 +13.87% Thu 05 Nov 2015 10:29 AM (Sydney )

Credit Corp Upgrades Full Year 2016 Results Guidance
Thursday 5 November 2015

Credit Corp Group Limited (ASX:CCP) (the Company or Credit Corp) today reported strong performance over the first four months of the 2016 financial year and as a result provided updated full year guidance in accordance with the following table.

Full Year 2016 Outlook
Issued Aug-15 Updated Nov-15
PDL acquisitions $90 - $120m $125 - $145m
Net lending $30 - $40m $30 - $40m
NPAT $40 - $42m $42 - $44m
EPS (basic) 86 - 91 cents 91 - 95 cents

In the Company’s core debt purchasing business, a combination of strong Purchased Debt Ledger (PDL)
acquisitions and the rollout of further operational improvements has produced record collection results.
Collections over the first four months to October are up by 10 per cent over the same period in the prior
year.

Operational improvements and continued leadership in sustainability and compliance represent a
compelling value proposition for Credit Corp’s clients. This has resulted in favourable outcomes in recent
forward flow renewals. The committed pipeline of full year PDL acquisitions now stands at $105 million,
which is $40 million higher than the same point in the prior year.

In Credit Corp’s lending business, the loan book continues to grow strongly and is presently tracking
ahead of expectations. Growth is primarily occurring in the personal loan product in the amounts of
$2,000 to $5,000. The decision to cease issuing small amount credit contracts (SACCs) from March
2016 will not affect the company’s ability to meet current year loan growth targets.

Despite unchanged external conditions, solid progress is being made in the United States. A
substantially improved operating model has been successfully trialled for purchases made over the first
four months of the current financial year. Early performance suggests that a 35 per cent improvement in
collection efficiency can be achieved. Legal collections are now tracking in line with internal targets. If
these early results can be confirmed, increased PDL purchasing at current pricing will bring the US
business to breakeven in future years.

Credit Corp is pleased to advise a strengthened relationship with its principal banker, Westpac.
Continued growth has necessitated a short-term increase in Credit Corp’s borrowing facility by $10
million to $85 million. This short-term increase will provide the company with the opportunity to review its
long-term borrowing alternatives in light of the strong growth outlook across all its businesses.

This media release should be read in conjunction with the Annual General Meeting materials released

817

 

[Ves]

The remarks at the CLH AGM paint an interesting picture for this industry, especially with PDL profitability and the (lack of) attractiveness of estimated future returns at current market prices for PDLs.

CLH are saying they've cut their buying by as much as 20% this year so far, but they're saying that other competitors are buying which means the unattractive prices are persistent.

CCP is still the biggest player. Are they still buying up?

So CLH is buying 20% less than this time last year because they don't think the PDL market is offering enough risk / reward at current prices.

But CCP is buying 10% more than this time last year and is now improving their market guidance.

Can they both be right?

 

[galumay]

So CLH is buying 20% less than this time last year because they don't think the PDL market is offering enough risk / reward at current prices.

But CCP is buying 10% more than this time last year and is now improving their market guidance.

Can they both be right?

Possibly, CCP has an advantage with the scale and quality of its data analytics, it also strikes me as a skilfully managed company. Its possible their efficiencies allow them to pick and choose well enough to find profit where others are unable?

 

[craft]

Updated as of FY15 results.

Awesome VS - thanks.

 

[ROE]

So CLH is buying 20% less than this time last year because they don't think the PDL market is offering enough risk / reward at current prices.

But CCP is buying 10% more than this time last year and is now improving their market guidance.

Can they both be right?

My money is on CCP, thought I am bias , proven track record, world beating analytic system
similar use of technology like DMP

CLH is like DMP vs Pizza Hut

 

[Faramir]

Hi ROE
Nice to hear from you again.
Sorry everyone for my not-so-good quality posts in #571 and especially #573. Sorry for not responding to any of the following comments. I just did not know what to say.

I like Page 6 of the CEO AGM Presentation.

http://www.asx.com.au/asxpdf/20151105/pdf/432rm4yhd1q31d.pdf

The table lists various info of CCP and their competitors. I was so tempted to buy Pioneer Credit. CCP is a better buy for me. ROE is 23% for CCP, ROE of 14% for PNC. Cash Converters has ROE of -8%.

I like page 5:

Significantly lower complaint rate per loan than either the credit card or personal loan averages reported by the EDR provider to mainstream credit product issuers.

I like Page 17: Update FY16 Guidance.

Hopefully I am looking at the right pages. Page 15 highlights their challenges.

Today's share price bounce from this report makes me happy. I didn't get the bottom but I was near enough. Thought I had to wait a long while before things turned around but under two weeks is great for me.

If I don't respond to any questions or posts, it is not because I am ignoring you: I am too uneducated to provide an adequate quality answer.

The best thing about this thread is that it has so many people I admire commenting on a great company that I can admire now. (Hopefully for a long while as well.) I have so much to learn.

 

[Faramir]

OK, I will try to explain myself better about the situation of Post #573. I admit that I suffered from FOMO. Last December, my alert was triggered off that CCP fell below $9. By the time I managed to gathered some funds together, CCP bounced back up and bounced up very quickly. I was convinced that I had definitely missed out throughout this year as report after report provided positive news and upgraded results. Then September showed a turn around in sentiment in this industry. Also two major US holders off loading their shares. As the price drifted down, I kept asking myself when will it bounce up again?? Finally I made my purchase Wed 28 Oct.

I had no ability to tell if CCP would fall further but I had no patience to wait for confirmation of an upward trend. I missed out last Dec. I suffer from FOMO. I believe good quality stocks such as CCP will always bounce up hard at the nearest opportunity. I didn't expect it today. My urgency was thinking "quick! Get in before it bounces beyond your reach!"

Maybe CCP will drift down more tomorrow? Next week? Next month?

I have emotions and why I let my emotions drive me silly??? I want to hold CCP for the long term. So why am I looking at small hourly movements when I know I am not trading this stock in the short term. Did FOMO get the better of me?? I guess today's news should settle my emotions down.

I have so much to learn. My emotions nearly robbed me of this opportunity. I think CCP achieved this years' high on my birthday 4 August. Thinking that this should have been my birthday present. Well, I hope I got it three months later.

If you believe that this post contributed nothing, you can always ask Joe to delete it. I won't mind.

 

[craft]

The best thing about this thread is that it has so many people.

If you believe that this post contributed nothing, you can always ask Joe to delete it. I won't mind.

Faramir - your posts add heaps. No one here knows the future. Everybody has to deal with their emotions in investing (unless they're a psychopath) and everybody is (or at least should be) on a learning path. - no different to you. I value your posts and I'm sure others do as well, keep them up.

 

[VSntchr]

I value your posts and I'm sure others do as well, keep them up.

+1.

As for CCP, anyone interested would do well to listen to the AGM presentation:
LINK

It gets to the meaty stuff around the 25min mark...

This most recent update is the first time CCP have provided any sort of good news with regard to the US. Potential to get to break even - without the environment improving. One of the slides also makes reference to their global peers - and how CCP crushes them on all relevant metrics.
Admittedly there may be other metrics not shown that the likes of Encore etc, will perform better on than CCP - however with Thomas Beregi openly stating that "We are not afraid of any giant peers"...."Size isn't everything, it's how you use it that matters" says alot to me.