CCP - Credit Corp Group

[prawn_86]

Yes my ordered is filled at market price .. I don't muck around when stock fall this far..i come in at market price...

I'm selling down some of other stock to free up cash and come in for more kill depending what price it trade by the day end.

Can i ask what your timeframe for this is ROE?

Are you looking for a dead cat bounce? or will it be a longer term hold?

If it keeps falling do you have a stop in place?

I have always thought that drops like this present an opportunity, but have always been worried of a continuing slide.

Any info appreciated

 

[dhukka]

The biggest risk here seems to be that CCP like their competitors have done in the past will overpay for a ledger and have to write it down. As the analyst at Linwar points out CCP have the most conservative amortisation policy among their competitors writing off a substantial portion of the ledger in the first few years but that still doesn't matter if you overpay for a ledger.

An upturn in bad debts is being anticipated by the major banks at the current point in the credit cycle giving further growth opportunities for CCP. However with more debt purchases comes the increased chance of overpayment. If the bad debt cycle is particularly strong management may be tempted and get greedy. Investors need to have faith in management to adhere to their tried and tested purchasing policy however there is always the chance that a bad ledger slips under the radar. Linwar forecast CCP to able to fund debt purchases from cashflow from 2008, this will improve ROI and also lend stability to the balance sheet and remove some of the risk.

Given their track record I think management should be given the benefit of the doubt but I'd be watching for any deviation in their stated investment and gearing policies

I wrote this back in January 07. As then I think the biggest risk is that they overpay for ledgers and can't recoup what they paid.
CCP typically buys ledgers for 15-20c on the dollar and is able to recoup around 60-70c on average. They are not talking about writedowns in the latest announcement but they are obviously not recouping as much as they have historically.

Remember they are still making a profit, they are not losing money...yet. I went in to Stockval to run my own valuation on the company and it has magically disappeared from the list.

 

[dhukka]

I was under the impression TRS was Cam's biggest shareholding then CCP was next. I agree that Roger has some explaining to do. Surely an institution like Cam should have access to information from management which could give an indication that NPAT was going to drop another 40%. I smell a stinky management rat in credit corp at the moment. How the hell does it take 4 months to work out that things are going to be 40% worse. I broke my own investment rules on CCP when I bought in 5.6. I have a rule never to buy into a stock with share specific weakness like a downgrade until enough time has passed to see whether there will be a turnaround. I simply loved the numbers on this one enough to ignore my own rule. Stupid me. Anyway CCP only makes up 5% of my portfolio. But I am mad at myself and the lesson has been learn't.

I think you're right. It was their biggest holding prior to the first downgrade. Then the whack to the share price put it in second place. Now it is possibly further down the list. Last time CAM came out and said confidently that they were loading up, I wonder if they are loading up today?

 

[ROE]

Can i ask what your timeframe for this is ROE?

Are you looking for a dead cat bounce? or will it be a longer term hold?

If it keeps falling do you have a stop in place?

I have always thought that drops like this present an opportunity, but have always been worried of a continuing slide.

Any info appreciated

I'm a long term holder so in the interim it may go hovering around $1-$15 but it's a viable business going forward.
I'm not getting out any time soon so if it drop to 50 cents I'm still not getting out... there is no down out strategy at this price for me

 

[Buffettology]

I think you're right. It was their biggest holding prior to the first downgrade. Then the whack to the share price put it in second place. Now it is possibly further down the list. Last time CAM came out and said confidently that they were loading up, I wonder if they are loading up today?

Yes, it would be very interesting to know if CAM are loading up on this today! Only time will tell!

I just bought a small parcel, will let it sit there now for the longer-term and see how it goes. Will re-evaluate once we get the final 07-08 figures.

 

[dhukka]

Someone just took out that huge bid of 500,000 at $1. There is still a lot of selling pressure here. Might chuck in a bid at $0.80.

 

[Pager]

Ive had a bite at 99 cents, as with other beaten up stocks Ive bought only a small parcel.

Not sure the bad announcement warrants a 75% sell off from an already beaten up stock???? Looks well over the top to me, even at the open of $1-80 seemed extreme!

Fingers crossed

 

[Buffettology]

Someone just took out that huge bid of 500,000 at $1. There is still a lot of selling pressure here. Might chuck in a bid at $0.80.

Yeh, but also notice when the price does get near $1, you get some HUGE buyers coming back in very quickly.

I think they are trying to scare the market by showing a small buying que so they can get in cheaper (make the sellers panic and offer lower prices).

 

[annalivia]

Holy s***.
I'm at work and just checked my portfolio. I am a big holder of CCP and CAM.
Initial reaction was shock. Next reaction…..buy more.
Final reaction….go to lunch, go for a walk(I still have 2 legs and there will be food on the table tonight) and think.
This company is not losing money. Could be the buy of the year.
I will probably wait to see what CAM have to say.

AL

PS It's only money

AL

 

[annalivia]

I never did go for that walk, I just bought 10,000 more.
Now it's time for that walk and maybe come back and buy more later.


AL

"Be greedy when others are fearful."

 

[ROE]

Someone just took out that huge bid of 500,000 at $1. There is still a lot of selling pressure here. Might chuck in a bid at $0.80.

Hello Margin call anyone ?
Damn by the day end there will be winners and losers out of this stock.

 

[chops_a_must]

The yield does indeed look shaky. I'm not sure they are making enough money at the moment to continue to pay one.

What do you think the chances are of this company repoing itself?

 

[blaze87]

hm..
let assume that we use the reported 10 million net profit for yr 2008
and if we include the estimated max restructing cost of 5 million

the overall npat would be 5 million
applying a margin of safety of 50% for this crazy company

so that would make a npat of approx 2.5 million
note this is a really rough estimate but any1 care to comment?

 

[TheRage]

hm..
let assume that we use the reported 10 million net profit for yr 2008
and if we include the estimated max restructing cost of 5 million

the overall npat would be 5 million
applying a margin of safety of 50% for this crazy company

so that would make a npat of approx 2.5 million
note this is a really rough estimate but any1 care to comment?

Why would you include the restructuring cost of 5 million into the NPAT when theoretically this would have been accounted for in the NPAT guidance?

 

[blaze87]

it says in the announcement
the guidance does not include the restructuring costs.
i double check on smh
http://business.smh.com.au/credit-corp-smashed-by-dud-debt/20080211-1rht.html

 

[dhukka]

Why would you include the restructuring cost of 5 million into the NPAT when theoretically this would have been accounted for in the NPAT guidance?

The announcement says

"This result is before anticipated costs associated with a restructure to be implemented by Directors following a detailed review of the Company's operations. These costs and charges and not expected to exceed $5 million.

So the $10-$12m is before the $5m charge. It's pretty hard to put faith in any earnings forecasts at the moment. Management credibility is shot.

 

[blaze87]

lol that little play on words will made a major difference.
hope nobody was going in thinking it was getting 10-12 million npat

 

[TheRage]

it says in the announcement
the guidance does not include the restructuring costs.
i double check on smh
http://business.smh.com.au/credit-corp-smashed-by-dud-debt/20080211-1rht.html

The ASX announcement is somewhat ambiguous. I re-read it again and it could be taken either to come from NPAT or from EBITDA. Obviously if the restructuring cost came from EBITDA it would be much more favourable than NPAT. Blaze your numbers are not far wrong if they cost comes straight out of NPAT and if you assumed a margin of safety as you said of 50%. I would imagine though that for this to happen that the real restructuring cost would need to be farily significant.

My take on what they mean is that the 5 million would be applied as a expense to EBITDA in the following financial period so based on the assumption that 2008-2009 will be the same EBITDA then 80 million will in fact be 75 million and if we work on a factor of NPAT to EBITDA of 12.5% (80million/ 10million) then Net profit for the next financial year, assuming all things equal would be 12.5% of 75million = 9.375 million.

 

[ROE]

The announcement says

So the $10-$12m is before the $5m charge. It's pretty hard to put faith in any earnings forecasts at the moment. Management credibility is shot.

They are going too far too fast and they need to slow down...when you grow too fast people expectation are high and they going to price you to perfection
and when those perfection became flaws they hammer you till you bleed.

 

[annalivia]

Checked out stockval and got the following...

The StockVal team is currently assessing the impact of CCP's earnings downgrade issued on 11/02/2008. The new valuation will be released once talks with CCP Management have been finalised.