CCP - Credit Corp Group
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Faramir
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On the bright side, CCP is one of my best performing stock. Thank you. Patience is a virtue. I hope I find another company like CCP (in terms of quality, management and original purchase price).
I look up to all of you wise people. I see the insights that you all have and I wish to learn.
Fear or caution is what stops me from spending more than 10% of my capital on a single stock. Even if I could read the future, I still would doubt if I would have brought more. Even if an angel or demi-God 100% guarantee a multi-bagger, I would hesitate to commit more funds. So I have no idea why I said I regretted saying "not buying more", when my instinct prevents me from doing so.
I organised to be part of DRP a few months ago. This should help me relax.
10% in a single stock is a sensible risk management, protection of capital is just as important as getting a good return.
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I'm still holding the shares after many years and will be quite happy to hold on for many more years to come. The company has a history of beating its initial guidance.
For FY2017 the company guided:
-Basic EPS of between 109.7 - 114 cents.
-DPS 55-57 cents.
I think the company in FY2017 will generate at least 115 cents in fully diluted EPS and a dividend of at least 58 cents fully franked.
Today's closing share price was $15.15. Based on my above minimum estimates (I actually think earnings and dividends may even be higher than that) based on today's closing share price I project the forward dividend yield will be at least 3.8% fully franked and the forward p.e. ratio will be around 13 - 13.5 times. For a well managed company which is a market leader in its sector and has a strong growth trajectory, able and proven management team and a strong balance sheet this is still an inexpensive price.
If I had spare money today (I don't currently) I would certainly be happy to buy even more shares. I think the shares will be much, much higher in 6 or 7 years time.
Note: last time I spoke to Thomas Beregi some months ago he said the default rates on the consumer lending business were averaging 8 or 9% per annum. If you look at the notes to the annual reports you will realize not only are they upfront provisioning but they are arguably provisioning for a higher expected loss rate than what they are actually experiencing.
Disclosure: Held
For FY2017 the company guided:
-Basic EPS of between 109.7 - 114 cents.
-DPS 55-57 cents.
I think the company in FY2017 will generate at least 115 cents in fully diluted EPS and a dividend of at least 58 cents fully franked.
Today's closing share price was $15.15. Based on my above minimum estimates (I actually think earnings and dividends may even be higher than that) based on today's closing share price I project the forward dividend yield will be at least 3.8% fully franked and the forward p.e. ratio will be around 13 - 13.5 times. For a well managed company which is a market leader in its sector and has a strong growth trajectory, able and proven management team and a strong balance sheet this is still an inexpensive price.
If I had spare money today (I don't currently) I would certainly be happy to buy even more shares. I think the shares will be much, much higher in 6 or 7 years time.
Note: last time I spoke to Thomas Beregi some months ago he said the default rates on the consumer lending business were averaging 8 or 9% per annum. If you look at the notes to the annual reports you will realize not only are they upfront provisioning but they are arguably provisioning for a higher expected loss rate than what they are actually experiencing.
Disclosure: Held
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The recent anouncement that CCP will purchase NCML from Thorn Group in my opinion will result in a profit upgrade at the AGM. I think there will be some small synergies, but more importantly Credit Corp has much higher levels of productivity than NCML and they will be able to boost the productivity of NCML post acquisition. Also they paid a sensible price (book value) for the acquisition. I think it was a smart acquisition.
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After the latest half year result I had a phone conversation with the company CEO Thomas Beregi. Since Credit Corp has no investor relations department the CEO and CFO generally answer shareholder questions. They usually answer their own phones and are happy to answer questions and are honest and knowledgeable. Their contact details are at the bottom of the recent 2 page media release:
For more information, please contact:
Mr Thomas Beregi
Chief Executive Officer
Tel: +612 8651 5777
Email: tberegi@creditcorp.com.au
Mr Michael Eadie
Chief Financial Officer
Tel: +612 8651 5542
Email: meadie@creditcorp.com.au
Here are my notes from my recent phone conversation with the CEO Thomas Beregi
-Weighted average consumer loan duration (for consumer lending book) is around 20 months possibly shorter
-The U.S. PDL prices are already low enough for them to purchase and achieve their minimum return hurdle. They are waiting for their existing staff to become more experienced so they can promote more staff to management positions and then hire new entry level employees. It will therefore take up to 2 years to significantly grow the employee base to a size that will allow for large purchasing volumes (assuming U.S. PDL prices do not rise in the meantime).
-Staff productivity in the U.S., Australia and the Phillipines is still increasing. This increased productivity is primarily being used to dig deeper into the ledger books to collect older debts (hence a higher proportion of collections coming from older debts) rather increasing collections rate per hour.
-The consumer lending book on the back of Wallet Wizard and Clear Cash can grow to around $230 million AUD (eventually in the medium to longer-term) in the current environment. This would additionally supplemented somewhat by New Zealand where they are just getting started more or less. The other lending divisions e.g. Car-start, Credit2U, Trove Capital, etc are in pilot stage and may or may not add significantly to lending volume in the future. Trove Capital has experienced low default rates so far due to strict lending criteria and short lending duration. Carstart and Credit2U are not doing well so far and they are still trying to tweak the business model.
-The commission/contingency based collections (the bulk of which came with the NCML acquisition) will continue to be small and only grow incrementally as it is not a huge addressable market. At best under an ideal scenario, this segment could generate $5 million a year in NPAT in 5 years time. Hence they will not focus a huge amount of management attention on it.
For more information, please contact:
Mr Thomas Beregi
Chief Executive Officer
Tel: +612 8651 5777
Email: tberegi@creditcorp.com.au
Mr Michael Eadie
Chief Financial Officer
Tel: +612 8651 5542
Email: meadie@creditcorp.com.au
Here are my notes from my recent phone conversation with the CEO Thomas Beregi
-Weighted average consumer loan duration (for consumer lending book) is around 20 months possibly shorter
-The U.S. PDL prices are already low enough for them to purchase and achieve their minimum return hurdle. They are waiting for their existing staff to become more experienced so they can promote more staff to management positions and then hire new entry level employees. It will therefore take up to 2 years to significantly grow the employee base to a size that will allow for large purchasing volumes (assuming U.S. PDL prices do not rise in the meantime).
-Staff productivity in the U.S., Australia and the Phillipines is still increasing. This increased productivity is primarily being used to dig deeper into the ledger books to collect older debts (hence a higher proportion of collections coming from older debts) rather increasing collections rate per hour.
-The consumer lending book on the back of Wallet Wizard and Clear Cash can grow to around $230 million AUD (eventually in the medium to longer-term) in the current environment. This would additionally supplemented somewhat by New Zealand where they are just getting started more or less. The other lending divisions e.g. Car-start, Credit2U, Trove Capital, etc are in pilot stage and may or may not add significantly to lending volume in the future. Trove Capital has experienced low default rates so far due to strict lending criteria and short lending duration. Carstart and Credit2U are not doing well so far and they are still trying to tweak the business model.
-The commission/contingency based collections (the bulk of which came with the NCML acquisition) will continue to be small and only grow incrementally as it is not a huge addressable market. At best under an ideal scenario, this segment could generate $5 million a year in NPAT in 5 years time. Hence they will not focus a huge amount of management attention on it.
galumay
learner
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Hi VC, thanks for the detailed summary of your phone call, interesting background to the report.
They have certainly been one of my better performers.
They have certainly been one of my better performers.
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It popped up on a weekly scan tonight, still another day to go. (I don't hold)
(weekly chart - click to expand)
(weekly chart - click to expand)
Knobby22
Mmmmmm 2nd breakfast
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As a short? I really don't think it will fall much further. Bargain hunters will jump in. I have the share value as around $17 so a drop to $14 is possible I suppose.
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No, comes up in a scan as a stop out.
Haven't tested it to see how it would fare as a short entry as that too would need a stop.
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on support ready to move back up
galumay
learner
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Maybe, CCP is quite a volatile share, I just ignore the lumps and bumps, its close to another multibagger for me now and management just continue to under promise and over deliver. A very well run business that has some significant competitive advantage. I love owning businesses where I just have to check in twice a year and read the good news, pick up some more divvies and then rinse and repeat!
Knobby22
Mmmmmm 2nd breakfast
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Agree, one of my biggest holdings.
It took a while for the analysts to understand the business. I think it is reasonably fair value now, not super cheap as it has been for years.
It took a while for the analysts to understand the business. I think it is reasonably fair value now, not super cheap as it has been for years.
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Its been my and my parents largest shareholding for many, many years now 
Not many companies in Australia that can increase earnings year in, year out the way Credit Corp does.
Not many companies in Australia that can increase earnings year in, year out the way Credit Corp does.
Triathlete
Keep it Simple..!
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Now that CCP has broken through $18.50 we might get a run up in price....any other views on this stock?
Weekly chart:
Weekly chart:
Rypieee
Newbie Keen Beans
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Same thoughts on CCP triathlete
Maybe tomorrow would be entry day. I know you're a SD Member as well so my other thoughts are SSM which i will be watching closely tomorrow, potential breakout for SSM on an ascending triangle/Horizontal Res.
Triathlete
Keep it Simple..!
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Same thoughts on CCP triathlete
Yes I had SSM in my alerts as well for a break and close above $1.28......let us see what happens......
galumay
learner
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CCP has some very strong tailwinds, it seems to always under promise and over deliver, it has fantastic data algos that gives it a competitive advantage in the sector and CCP have avoided the payday lending end of the market. Good management, consistent growth and conservative capital management. Given the history it took the market quite a while to wake up to the real value in this business, I have held since they were sub $10 and accumulated steadily until they started running up.
It has entered the range of fair value I calculate for the business, but I wont be surprised to see that adjusted upwards next reporting season.
Triathlete
Keep it Simple..!
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Looks like you found a winner with this one.....from what I can see its returned 32% P/A last 5 years.
galumay
learner
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Yes, I bought in nearly 3 years ago, am up 100% plus 25% in dividends over the 3 years. (gross)
If I can avoid anymore SGH's then I dont need many CCP's to make my returns look very healthy!!
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