CCP - Credit Corp Group

[ROE]

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.

The more the merrier , I always try to learn and engage doesnt matter how trivial things are
I always manage to find something useful when someone speak.

like craft said everyone has to deal with their emotion when it comes to money and investing so dont make it any harder on yourself, just try to learn and engage so you you can make an informed decision.

I dont post much these days I pop in every so often as I spend more of my time out side the internet doing other healthier things

 

[Knobby22]

I have had to sell as I am building a house but am going to set up a geared portfolio.

The big concern with this company has always been the USA. If that starts to work well as it appears to be slowly starting to- then look out!

Still interested.

 

[Value Hunter]

I have so much of my own and my parents wealth invested in CCP if it stuffs up it will be a big blow. I have confidence in the continued strong performance of the company.

As for CCP vs CLH, Credit Corp is able to increase purcahses despite the increased PDL prices and maintain returns because it has better productivity and is improving its productivity at a faster rate than Collection House.

 

[galumay]

The recent volatility in CCP is really a reflection of how thinly traded it is relative to its cap. What a roller coaster ride! A decent test of investor intestinal fortitude, and a good example of why not to look at the price very often when you hold part ownership is good businesses!

I picked up a couple of parcels plus the DRP so the SMSF has had a nice little kick along this week.

 

[JTLP]

Anybody still holding these?

Due to announce their FY results end of the month, they upgraded guidance in November, so hopefully another little surprise soon

I did notice that the DRP is back in action now, anyone know why?

 

[VSntchr]

Anybody still holding these?

Due to announce their FY results end of the month, they upgraded guidance in November, so hopefully another little surprise soon

I did notice that the DRP is back in action now, anyone know why?

Holding.
Looking forward to the result. Hopefully the strong business momentum continues.
IMO the DRP has been reactivated as the company has good options to deploy growth capital.

 

[tinhat]

Anybody still holding these?

Due to announce their FY results end of the month, they upgraded guidance in November, so hopefully another little surprise soon

I did notice that the DRP is back in action now, anyone know why?

I just checked and I've been holding CCP for two years now. Bought in at an average price of $8.99 in December 2013. I haven't paid them much attention because they just tick all the boxes based on fundamentals - solid ROE, solid EPS growth (a healthy internal rate of return on retained profits) with a fully franked dividend (yielding me 7% grossed up), and yet, look at the share price. It got over $13.50 last year.

 

[Muschu]

This is a very small hold in my SMSF... Pension phase.

I am frequently surprised at the volatility of the SP on the back of no news. Down 2.65% today - more than market average.


Are there external forces (manipulative) at play here? I have no idea.

Holding for now.

 

[galumay]

This is a very small hold in my SMSF... Pension phase.

I am frequently surprised at the volatility of the SP on the back of no news. Down 2.65% today - more than market average.


Are there external forces (manipulative) at play here? I have no idea.

Holding for now.

Its always been a volatile stock, its tightly held and thinly traded. CCP form a significant part of my SMSF, have learnt to ignore the volatility.

 

[JTLP]

Money for jam and just a fantastic deliverer for me. Set and forget

 

[ROE]

Money for jam and just a fantastic deliverer for me. Set and forget

Nice I am still holding

 

[Faramir]

I brought 228 shares @ $8.86 plus $14.95 brokerage. Being watching for a while. Over the last 14 or more months, I was wondering if I ever get an opportunity to get in. Finally I decided now is the time. Recent sentiment around these companies will turn around.

My 1st regret: not buying more! 2015 was a tough year for me. I only brought two stocks. SRX and CCP.
2nd regret: not knowing anything about investing 5-7 years ago. That would have been a better opportunity to buy CCP.

To all long term holders: I worship your faith and wisdom in buying CCP all those years ago when things looked grim. How you all develop that insight into CCP? I have yet to learn.

I wonder how I can get involved with DRP since I am a very tiny share holder.

 

[Muschu]

Money for jam and just a fantastic deliverer for me. Set and forget

Kept these but foolishly sold TCL and SYD... Can't win em all...

 

[galumay]

Money for jam and just a fantastic deliverer for me. Set and forget

Indeed, topped up a couple times this year. Very happy.

 

[Value Hunter]

I last spoke to Thomas Beregi over the phone on 16th May 2016. He generally answers his own phone (unless he is busy or not around) and is very forthcoming and happy to answer questions from shareholders or prospective shareholders as is the CFO. I speak to him a few times a year and find him to be honest, trustworthy, conservative and able. Here are my notes from the conversation based on my interpretation of what he said (I have added my understanding based on previous conversations into the notes):

Productivity (in terms of average collections per FTE of collection employees) improving across board in Phillipines, U.S. and Aus. Headcount in Philippines is around 220.

They are not currently expanding at the moment in the Philippines as the site pretty much at full capacity physically so they would either have to move premises or open a second site. Also small balance debt purchases (e.g. Telco debt, etc) have not increased. The Philippines are primarily there to do certain tasks such as collect low balance debt, etc which is uneconomical to do with Australian collectors. However due to the language and cultural differences they are somewhat less effective at collecting higher value debts than Australian collectors (can expand on the reasoning behind this if anyone is interested). Credit Corp will reconsider expansion in the Philippines in future should low balance debt purchases increase or productivity in the Philippines increase sufficiently (it is still rising incrementally). Although this presentation (not on the ASX website) http://www.slideshare.net/informaoz/matt-angell-credit-corp is a few years old it does show that the expansion in the U.S. and Philippines workforce has been to some extent masking the strongly rising productivity of the Australian workforce. Refer to slide ten in the presentation.

Consumer Lending: 90%+ of volume is for loans in excess of $2000. Car loan volume static at $10 million. Looking at ways to grow Car Loans. Cash loans also hitting growth limits. Google announced they will not accept adwords for payday lending (which they define as loans that are less than 60 days). However google may not actually enforce the announcement. Harder for Credit Corp to obtain new customers as they must be taken from existing micro and payday lenders (as they have to a large extent monetized there existing debtor database and also the micro-lending segment total growth has slowed). Thomas said that the TV ads surprisingly did implant Wallet Wizard in consumer minds, and that even now months after the TV ads have stopped a lot of people are still doing searches on google for "Wallet Wizard" specifically.

Because they withdrew from shorter-term loans and the net returns on longer term products (due to a lower rate/fee being charged) are lower, as a result they are not advertising on TV anymore for now (hence the disappearance of the Wallet Wizard ads). They may revisit TV advertising in future. Customer acquisition strategy is focused on google search and general online advertising and from existing collections database. Also prime lender (large non bank financial plus peer to peer lending referring to them) referral service for declined (application for a loan was not approved) customers which is a relatively new development.

A small pilot product for unsecured business loans up to 6 months is currently being tested. Showing promise so far but it is a risky business and Thomas is not convinced it will become a viable product. Disorganized and risky entrepreneurs tend to take these loans. Wait and see how it goes. Endeck from the U.S. has been operating for 10 years in the unsecured business lending segment in the U.S. and is not profitable yet but has entered Australia. Scottish Pacific which do mainly invoice factoring and discounting may possibly be looking to IPO in Australia.

U.S. business will only expand marginally from current levels (and will be marginally profitable in 12-18 months) unless prices drop 10 – 15%. A 15% drop in U.S. PDL prices would allow a 20% return on equity in that business.

The business will get a further increased bank debt facility (U.S. debt for U.S. business and Australian debt for Australian business to manage currency risk) if growth is strong in all business segments and more capital is needed. Potentially once that is done more equity could be raised from the Australian share-market in a few years if necessary (i.e. growth is strong and bank debt has already increased to its prudent limits). Also if U.S. business becomes big enough in the future a dual/second U.S. listing could be considered.

They currently pay around 1% (variable) interest rate for U.S. debt and 3-4% interest rate for Australian debt (variable).

In 3-5 years if they may consider consumer lending and PDL purchases in some countries in Europe depending on the growth in the Australian and U.S. businesses.

 

[Value Hunter]

I am very bullish on the company and stock in the long term and believe they can keep compounding e.p.s. at double digit rates over the long-term while paying good dividends.

What is clear from conversations with people from Credit Corp (the chairman, multiple other directors, Thomas, the CFO, etc) over the years is the company:
-Has an unspoken philosophy of under-promising and over-delivering.
-Is always piloting (in a tiny and measured way) new products and looking at new ways to expand long before informing the market of such. They are not complacently relying on favourable market conditions in existing operations to enable future growth. Rest assured they are always 2-3 years ahead in developing a plan b and c for growth opportunities should they not be available in their existing lines of business.
-New growth opportunities are always tested in a small and measured way for an extensive incubation period (at least a few years) before they officially announce a move into a new product or market segment to the market. They were researching the U.S. 2-3 years before they officially moved into that market. They genuinely take a cautious and measured approach to expansion and risk management is front of mind.
-In terms of the quality of the management team compared to other ASX listed companies in my subjective opinion they would be in the top 2%. A major reason for CCP being my largest holding.

 

[galumay]

Thanks VH for the detailed info, they form a significant part of my SMSF and I have taken advantage of the volatility to top up at opportune times. They strike me as a well managed company who understand their business well. Happy to hold and have enjoyed the recent run!

 

[Knobby22]

Good result.

 

[bigdog]

fantastic result

CCP $15.400 +$2.000 +14.93% @ Tue 02 Aug 2016 10:40 AM


Media Release FY2016 Results Tuesday 2 August 2016
Highlights

The directors of Credit Corp Group Limited (Credit Corp) are pleased to report a strong performance for the year to 30 June 2016. Key highlights are as follows:
● 20 per cent increase in Net Profit After Tax (NPAT) to $45.9 million
● Strong consumer lending segment NPAT of $6.1 million
● Record investment of $287.0 million to sustain growth
● Positive outlook across all businesses with FY2017 NPAT growth guidance of 13 to 18 per cent

1943

 

[galumay]

Thank you CCP, pass go, pick up another cheque, rinse and repeat. Great year.