CCP - Credit Corp Group
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Make that 100% over 2 days. And Don has bought more, albeit at still a high average compared to the last few days ($12.40).
To be honest, still think we’ve got a down period once stage 2 affects life.
galumay
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I agree JTLP plenty of hurt to come yet.
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Yes pretty weird market, "may you live in interesting times"
On a short term daily scale that appears as a very bullish reversal day to me. Don't know what the exact pattern is named but I'm calling it close enough to a bulliish engulfing pair. The positive day was the strongest volume of a year or more. Can't know whether we'll get a weekly or monthly reversal signal yet.
Hope my comments aren't distasteful to holders of CCP. A bit tactless really, I like market drama. Fundamentals trump charts but I can only use what I got.
Um, I wrote that yesterday and my post disappeared when I was on another site looking at the chart. Now the post was there ready to be posted today!
Gap up so far today, very strong 3 candle combo. Chairman been buying big. Waiting for a monthly reversal signal in April/May and sacrificing upside is the only safe way to go for a chart follower, fundamental analysts have the edge here.
CCP 6 MTH DLY
On a short term daily scale that appears as a very bullish reversal day to me. Don't know what the exact pattern is named but I'm calling it close enough to a bulliish engulfing pair. The positive day was the strongest volume of a year or more. Can't know whether we'll get a weekly or monthly reversal signal yet.
Hope my comments aren't distasteful to holders of CCP. A bit tactless really, I like market drama. Fundamentals trump charts but I can only use what I got.
Um, I wrote that yesterday and my post disappeared when I was on another site looking at the chart. Now the post was there ready to be posted today!
Gap up so far today, very strong 3 candle combo. Chairman been buying big. Waiting for a monthly reversal signal in April/May and sacrificing upside is the only safe way to go for a chart follower, fundamental analysts have the edge here.
CCP 6 MTH DLY
Knobby22
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The bots are so quick, in both directions.
Who knows what the price will be in a week.
Who knows what the price will be in a week.
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Latest candidate for the day traders. Plenty of range and depth.
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The problem with this announcement is that they seem to be playing with words rather than being frank and honest. Telstra was reporting serious issues with staff being able to attend their Philippines call centre as early as the 17th of March. CCP has a very large call centre in the center of Manila I find it hard to believe that they weren't facing the same issues at the time of this release.
Re work from home arrangements. Most call centres would never allow their staff to access their systems without physical supervision. Yes the technology for WFH exists but usually call centres don't want to use it. If they do want to use it, the transition is something that would take up to 12 months for a large organisation to figure out. The problem with the "business as usual" approach however is that it only take one government restriction, or one confirmed NCOV case in the building to shut down the operation overnight.
I think this is what is mean when CCP refers to "increased restrictions on the availability of Credit Corps workforce". I wont be buying until they provide more transparency on the matter. It's disappointing that the update was so vague and it makes me think they not telling the full story.
Source on telstra: https://www.9news.com.au/national/c...arantine/63c43bba-932a-4dc7-8f15-0747a77fc4f5
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Came across more (old) information on the Philippines call centers.
Telstra and Optus have had to close most of their call centres in the Philippines, as Manila went into lockdown on Monday night to prevent the spread of COVID-19.
It is understood the new containment rules will force call centre operators in Manila to provide employees with special accommodation and transport. They will also have to rearrange the layout of the centres to increase the physical distance between workers.
Looks like the Philippines call center may already be closed. Really needs to be announced to the market if it has been.
https://www.afr.com/companies/telec...s-as-telcos-form-crisis-group-20200317-p54asy
Also Senators in the US are starting to push for Debt Collectors to cease all collections activity. So it could also mean strong headwinds for the US operation.
https://www.brown.senate.gov/newsro...ing-americans-during-the-coronavirus-pandemic
Telstra and Optus have had to close most of their call centres in the Philippines, as Manila went into lockdown on Monday night to prevent the spread of COVID-19.
It is understood the new containment rules will force call centre operators in Manila to provide employees with special accommodation and transport. They will also have to rearrange the layout of the centres to increase the physical distance between workers.
Looks like the Philippines call center may already be closed. Really needs to be announced to the market if it has been.
https://www.afr.com/companies/telec...s-as-telcos-form-crisis-group-20200317-p54asy
Also Senators in the US are starting to push for Debt Collectors to cease all collections activity. So it could also mean strong headwinds for the US operation.
https://www.brown.senate.gov/newsro...ing-americans-during-the-coronavirus-pandemic
galumay
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Nothing has changed with the long term prospects of CCP & while anything is possible, the past experience in 2007 etc gives us confidence that CCP is well managed to ride out the short term effects.
It’s very hard to make sense of the future. There’s a few “may” “ifs” and “buts” scattered throughout the doc. Key things for me:
- Collection rates have dropped as people can’t obviously service their ability to repay
- Once government stimulus finishes they may be in a worse predicament to collect funds
- Lending function is basically dead IMO
- US still seems hazy. Not sure what to expect.
Will the SPP be a great buying opp? It seems the world has irreversiblely changed with businesses closing and job losses, so not sure how much can be made in a crisis. Bottom of the human pyramid is survival; I’m not paying a debt obligation if it means missing a meal. I’ll sit and think for now.
galumay
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Feel much the same. Especially as we had the chance to add to our positions at a lot less than the SPP price in the last 6 weeks or so. Didn't buy then, so why pay more now?
galumay
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Gapped up?! Yes, got me reconsidering too. what a crazy market.
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It is unfortunate the directors of Credit Corp have chosen such nonsensical dividend policies.
The company since listing on the ASX in 2000 with around 28.4 million shares on issue (including outstanding options, etc) and has had multiple capital raisings. They did an IPO in 2000 a capital raising in 2002, one in 2003, one in 2006, one in 2019 and now in 2020 they are doing another one.
In total I estimate its around $320 - $330 million in capital raised from shareholders if you include the IPO and the estimates of the current capital raising. Since they listed they paid approximately $229 million in fully franked dividends. So whatever money they have paid in dividends they have more than taken that money back from shareholders. If you include the benefit of franking credits on the $229 million the gross dividends received by shareholders is around $327 million. Pretty much bang on what they have raised from shareholders since listing...... Basically paying dividends and then asking for all the money back.
Therefore clearly the dividend policy of the company has always been nonsensical and does not take into account that its a capital intensive business with a long growth runway and all the earnings of the business should have been retained.
When the company did its IPO in 2000 the fully diluted (including options) number of shares outstanding was around 28.4 million. After this capital raising the total number of shares on issue will be around 61 million. If the company had paid no dividends since listing and had also paid all management bonuses in cash (rather than using options) and had an extra $100 - $120 million in debt on its balance sheet (remember gearing would come down quickly if there are no dividends being paid so the extra debt would be more manageable) they could still have the original share count of around 28.4 million. Since listing Credit Corp shareholders have received a little under $5.5 of fully franked dividends per share which is a bit less than $8 of grossed up dividends. If no dividends were paid the share count would be less than half and the share price theoretically would be around $31.90 instead of $14.85.
So the roughly $8 of grossed up dividends shareholders have received cost them around $17 of share price gain. So in effect every dollar of dividends shareholders received cost them around $2 of foregone capital gains. It sounds like a terrible deal to me. Despite strong management the directors have collectively cost shareholders many hundreds of millions of dollars due to poor decision making.
The company since listing on the ASX in 2000 with around 28.4 million shares on issue (including outstanding options, etc) and has had multiple capital raisings. They did an IPO in 2000 a capital raising in 2002, one in 2003, one in 2006, one in 2019 and now in 2020 they are doing another one.
In total I estimate its around $320 - $330 million in capital raised from shareholders if you include the IPO and the estimates of the current capital raising. Since they listed they paid approximately $229 million in fully franked dividends. So whatever money they have paid in dividends they have more than taken that money back from shareholders. If you include the benefit of franking credits on the $229 million the gross dividends received by shareholders is around $327 million. Pretty much bang on what they have raised from shareholders since listing...... Basically paying dividends and then asking for all the money back.
Therefore clearly the dividend policy of the company has always been nonsensical and does not take into account that its a capital intensive business with a long growth runway and all the earnings of the business should have been retained.
When the company did its IPO in 2000 the fully diluted (including options) number of shares outstanding was around 28.4 million. After this capital raising the total number of shares on issue will be around 61 million. If the company had paid no dividends since listing and had also paid all management bonuses in cash (rather than using options) and had an extra $100 - $120 million in debt on its balance sheet (remember gearing would come down quickly if there are no dividends being paid so the extra debt would be more manageable) they could still have the original share count of around 28.4 million. Since listing Credit Corp shareholders have received a little under $5.5 of fully franked dividends per share which is a bit less than $8 of grossed up dividends. If no dividends were paid the share count would be less than half and the share price theoretically would be around $31.90 instead of $14.85.
So the roughly $8 of grossed up dividends shareholders have received cost them around $17 of share price gain. So in effect every dollar of dividends shareholders received cost them around $2 of foregone capital gains. It sounds like a terrible deal to me. Despite strong management the directors have collectively cost shareholders many hundreds of millions of dollars due to poor decision making.
galumay
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Great post, VH, and a reminder why looking at capital allocation is so important for the long term investor. Thats something that had gone under my radar with CCP. I cant complain considering how much I have made over the years, but as you point out it could have been a lot more.
galumay
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Thinking further about your point last night, part of the blame probably falls on AUstralia's unique dividend tax treatment. The wealthfare program of rebating dividend franking credits and the general dividend imputation rules have been a hugely powerful incentive for businesses to pay dividends rather than looking at alternative capital allocation strategies.
A timely reminder of the power of incentives and the harm they can cause!
A timely reminder of the power of incentives and the harm they can cause!
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I agree with your sentiment, but from a personal perspective and having lived off my invested capital for nearly 10 years, at the moment without the franking credits people will have to have a hell of a lot of savings to stay off the pension.
Having a comfortable retirement if you own a house, takes about $50- 60k if you are still active and want to do holidays, well with interest rates at 1.5% if dividends/ franking credits are reduced it will take a lot of capital to go 20 -30 years. Or else capital would have to be deployed into some other investment with greater returns, which in all likelyhood would be property, which in turn brings about more problems.
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CCP may or may not be an outlier in this respect (I don't know) and it is easy to say what they should have done in hindsight.
But FWIW there is plenty of academic research which shows that, on average, companies that have higher dividend payout ratios do better (measured by future earnings growth) than those that retain their earnings. It seems the underlying root cause of this is that again, on average, management teams are not great at allocating retained earnings and tend to destroy value rather than creating it.
Here's one famous paper about the topic from Asness/Arnott https://papers.ssrn.com/sol3/papers.cfm?abstract_id=295974
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