Australian (ASX) Stock Market Forum

CCP - Credit Corp Group

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Does anyone know where I can find the terms of reference, on the senate website?

Struggling to find it.

On CCP: They've always claimed to not be payday loans, as the line of credit is persistent (I think that's the argument). As such, they may escape this completely.
 
I am not sure they have released a detailed terms of reference yet. CCP are not a payday lender under the current definitions, but such an enquiry might broaden the definition so I think the risk is real for CCP.

It presents an interesting dilemma, its a great opportunity to increase position size if one has conviction that they will escape any punative legislative impact, but very difficult to work out a valuation if they are impacted.
 
Credit Corp results were better than expected up 13%. Every parameter looks better.
The Wallet Wizard product which is way cheaper than the heavily advertised Nimble is also going very well. Another competitor to the banks who will rip off the consumer much more for a small loan. Once again its the savvy millennials who take advantage of the lower rates.

I own only a few Bendigo Bank shares and wonder if I should be selling these.

My second largest holding these days.
 
Gee, market is jumpy.
Director with 5 million shares sells 5 thousand and the price drops $1.
 
I am still thinking about it, its not a huge discount, and I wasn't looking to build my position any further - but I am tempted!
 
I don't have enough shares but also limited funds. As @galumay said, there's not enough discount. Plus is there a chance we could get a better price on the Open Market if there's a sudden dip for any reason???? I do want more shares. I can't regret not buying more in my initial purchase because I didn't have any more funds. I can only regret not doing my research properly.
 
Will definitely be buying more. If they’re at $20.50 or so you’re already up a good chunk. Market reaction has also been very positive.

However they’re only raising $10m from shareholders (tokenistic as they don’t really need it) so you’ll probably end up with an extra 10 shares.
 
JTLP said:
Will definitely be buying more. If they’re at $20.50 or so you’re already up a good chunk. Market reaction has also been very positive.

However they’re only raising $10m from shareholders (tokenistic as they don’t really need it) so you’ll probably end up with an extra 10 shares.
Click to expand...

$20.45 a share. hard to resist, unfortunately I am fully bought at present, have to sell something. Decisions, decisions... maybe scrape together $500 as after as you say we are unlikely to get many.
 
mmm...its getting more compelling, on todays close the SPP represents a 14% discount, thats not to be sneezed at, assuming the SP holds around this level.
 
Personally I think the way the board of directors has run the capital management of the company has been suboptimal:

1) Firstly they have been frequently issuing stock options to management and thus diluting shareholders. A quality growth company like this should be paying its management bonuses in cash or buying shares on market and escrowing them as rewards for executive options plans rather than diluting shareholders by issuing new shares.

2) From time to time they have done Dividend Reinvestment Plans (DRPs) which were not necessary and diluted shareholders.

3) The dividend payout ratio has generally been around 50% which is far too high for a growth company like this. If they had a lower payout ratio from the start they would have less debt (and more equity) on the balance sheet now and would have been able to fully fund the current investment program without a capital raising.

4) Even with the current balance sheet given how much headroom the company still had under existing debt facilities and how much they were able to increase the debt facilities recently they would have been able to fund their investment program without the capital raising by taking on more debt (in the short term) and permanently lowering the dividend payout ratio to something like 20%

5) The capital raising was done in an unfair manner. Instead of allocating so much to institutions they could have issued less to institutions and had a renounce-able fair pro-rata rights issue for retail shareholders. Instead the retail shareholders got a share purchase plan capped at $15,000. What if you are a retail shareholder who owns $500,000 of shares in Credit Corp? You get diluted is what happens.

6) The board and management should stick their hands in the pocket and buy more shares in the company. Insider ownership of the stock is low.

When you are a dog company like Telstra or Qantas, issuing shares for various reasons is not a big deal, but when you are one of the great growth stocks like Credit Corp, Seek, CSL, Cochlear, ARB Corporation, etc you should be keeping a lid on shares outstanding as any shares issued today will prove costly in the long run to shareholders.

All of the above being said overall CCP is still a well managed company and its capital management and track record is still better than 95% of companies listed on the ASX. They invest money wisely, they keep the balance sheet strong, they don't make dumb overpriced acquisitions, etc. But I am just pointing out their is still a lot of things that could be better.

And for what it is worth even if the retail share purchase plan exceeds their $10 million target I think they will accept the extra money rather than scale it back.
 
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Dont disagree with you assessment Value Hunter, but as you say, capital allocation/management is generally at an appalling standard in ASX businesses. Very rarely are the incentives for management aligned with share holder interests (options being an obvious example), capital raisings notoriously favour institiutional investors with almost no consideration of retail investors, dividends are far too often paid ahead of value adding share buybacks and too few directors have real skin in the game.

As you pointed out, plenty of room for improvement.
 
Here is a good article written a while back about Credit Corp for those who are not too familiar with the company it gives a good overview.
https://wholesaleinvestor.com.au/creditcorp-consistently-under-promising-and-over-delivering/

Although there are some figures in the article which are arguably disputable. For example in the article it says "They operate by purchasing overdue ledgers mainly from the banks; they pay close to 20 cents in the dollar on the face value of the loans and generally collect 60 cents over the next four to five years." While the 20 cents on the dollar figure is somewhere in the ballpark the 60 cents worth of collection is arguable. if you go back and look at some of their older presentations the company talks about an approximate 2.3 times revenue return multiple over the life of the loan (albeit their is a little bit of residual still collected after the debt has been fully amortized).

You are looking at something maybe around 46 cents plus a little bit of residual so perhaps something around 50 cents or slightly higher in total. Not quite at the 60 cent level.

From my understanding of speaking to management a while back no way the "residual" would be enough to push you up from a 2.3 times revenue return multiple to a 3 times revenue return multiple. As fro the 40% market share figure that fluctuates substantially from year to year due to the nature of the business.
 
Value Hunter said:
Personally I think the way the board of directors has run the capital management of the company has been suboptimal:

1) Firstly they have been frequently issuing stock options to management and thus diluting shareholders. A quality growth company like this should be paying its management bonuses in cash or buying shares on market and escrowing them as rewards for executive options plans rather than diluting shareholders by issuing new shares.

2) From time to time they have done Dividend Reinvestment Plans (DRPs) which were not necessary and diluted shareholders.

3) The dividend payout ratio has generally been around 50% which is far too high for a growth company like this. If they had a lower payout ratio from the start they would have less debt (and more equity) on the balance sheet now and would have been able to fully fund the current investment program without a capital raising.

4) Even with the current balance sheet given how much headroom the company still had under existing debt facilities and how much they were able to increase the debt facilities recently they would have been able to fund their investment program without the capital raising by taking on more debt (in the short term) and permanently lowering the dividend payout ratio to something like 20%

5) The capital raising was done in an unfair manner. Instead of allocating so much to institutions they could have issued less to institutions and had a renounce-able fair pro-rata rights issue for retail shareholders. Instead the retail shareholders got a share purchase plan capped at $15,000. What if you are a retail shareholder who owns $500,000 of shares in Credit Corp? You get diluted is what happens.

6) The board and management should stick their hands in the pocket and buy more shares in the company. Insider ownership of the stock is low.

When you are a dog company like Telstra or Qantas, issuing shares for various reasons is not a big deal, but when you are one of the great growth stocks like Credit Corp, Seek, CSL, Cochlear, ARB Corporation, etc you should be keeping a lid on shares outstanding as any shares issued today will prove costly in the long run to shareholders.

All of the above being said overall CCP is still a well managed company and its capital management and track record is still better than 95% of companies listed on the ASX. They invest money wisely, they keep the balance sheet strong, they don't make dumb overpriced acquisitions, etc. But I am just pointing out their is still a lot of things that could be better.

And for what it is worth even if the retail share purchase plan exceeds their $10 million target I think they will accept the extra money rather than scale it back.
Click to expand...
I hope you are right and they won't scale it back.

I note in the offer document that they state they may scale back based on the size of your shareholding.
This suggests that if you only own say $10,000 worth you may be unlikely to get another $15,000 worth.

We will see.
 
Value Hunter said:
Here is a good article written a while back about Credit Corp for those who are not too familiar with the company it gives a good overview.
https://wholesaleinvestor.com.au/creditcorp-consistently-under-promising-and-over-delivering/

Although there are some figures in the article which are arguably disputable. For example in the article it says "They operate by purchasing overdue ledgers mainly from the banks; they pay close to 20 cents in the dollar on the face value of the loans and generally collect 60 cents over the next four to five years." While the 20 cents on the dollar figure is somewhere in the ballpark the 60 cents worth of collection is arguable. if you go back and look at some of their older presentations the company talks about an approximate 2.3 times revenue return multiple over the life of the loan (albeit their is a little bit of residual still collected after the debt has been fully amortized).

You are looking at something maybe around 46 cents plus a little bit of residual so perhaps something around 50 cents or slightly higher in total. Not quite at the 60 cent level.

From my understanding of speaking to management a while back no way the "residual" would be enough to push you up from a 2.3 times revenue return multiple to a 3 times revenue return multiple. As fro the 40% market share figure that fluctuates substantially from year to year due to the nature of the business.
Click to expand...

Hi Value Hunter,

The collection of 60 cents includes the 20 cent cost of the loan leaving a profit of 40 cents plus a little bit of residual, say 6 cents, which brings you to a 2.3 times revenue return.

Cheers,
Rob
 
rnr I think you are mistaken. My understanding is that the 2.3 times revenue return multiple is inclusive of original capital invested.
 

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