CCP - Credit Corp Group

[Buffettology]

ha ha, or maybe not a 3 year treck to the wilderness ROE!

You could sell right now and make a HANDY profit if you wanted some short-term cash!

Anyone who bought at close yesterday would be laughing all the way to the bank! Unfortunately, I only got this one around lunch, when it was still not nearly finished with its sell-off!

 

[prawn_86]

Hmm...

But is it just a dead cat bounce?

As i have said before, im wary of these situations. But mainly because i dont have experience in them...

 

[Buffettology]

Yeh, I dont think you can tell whatsoever at the moment, its all happened in such a short timeframe.

Im just really looking for the market to move upwards at least in the short-term, now that the US seems to have got a grip on itself at least for the time being.

 

[ROE]

ha ha, or maybe not a 3 year treck to the wilderness ROE!

You could sell right now and make a HANDY profit if you wanted some short-term cash!

Anyone who bought at close yesterday would be laughing all the way to the bank! Unfortunately, I only got this one around lunch, when it was still not nearly finished with its sell-off!

I can but I'm not ... time like these the market suddenly give away money.
let put all the who ha and number aside. Look at what CCP actually is and that why I buy... not only the number is extremely good but the business as well.

The statement:
I called CCP a toll bridge business.. Banks..Government and Financial institution need CCP.

The Question:
Why?

The Answer:
1. Most of these institutions don't have a debt collection department, and if they do they not very effective or efficient.

2. These agencies dont want to have a bad image by chasing their customers for bad debt and get into a public PR nightmare.

3. Give banks and other institution a way to write off their debt and sell it for what ever it is and get it off their book.

4. Give banks a fall back weapons to take on higher risk lending and if it all fall to pieces they got people like CCP to come and chase their debt for a commission or sell it.

Now the question is how much do I want to pay for CCP ... for yesterday price I'm gladly paid for it without questions ask.

 

[Snakey]

yes nice day for holders today (1st one in about six months i think) out at close myself
tomorrow will be interesting leading up to reports on thursday ...more scared people tomorrow i think. will look for another entry in the next few days
happy with profits so far....look forward to more in the future
sorry to all those who have lost money on this one..Just remember its not a loss until you lock it in eddie..

 

[Buffettology]

Look at what CCP actually is and that why I buy... not only the number is extremely good but the business as well.

I agree with all you said in the post, but especially the above part. This is exactly the reason I bought also. As why I said wait for it to get back to its "core business". It realised its mistakes and it has shown what it can do when it concentrates on that, not trying to grow too quick.

Still plenty of $$ to be produced by CCP, but the fact that I could not value it, made me a bit cautious.

Still a long way to go yet, but if you are right ROE, you could make some SERIOUS returns on this one!

I like the toll bridge metaphor, in very true Buffett style!

 

[dhukka]

Assumptions are being made that this is still a very good business, however I think just about every underlying assumption about this business needs to be questioned. Clime (CAM) sent an email to all Stockval subscribers today. Below is an excerpt of the relevant points which may cause some to question how good a business model CCP really has. Then again, these guys have been wrong to date, so no reason to think they are right now.

Issues brought to light are as follows: 1) newly purchased debt ledgers have not performed as expected - this is contrary to management’s previous responses to our questions. 2) staff productivity remains a problem, due to rapid headcount expansion and; 3) costs in the business associated with staffing, management and infrastructure have increased dramatically.

We now believe there are either few or no economies of scale in this type of business or that present management are not capable of delivering those economies.

Management have always been protective of collection rates and prices paid for ledgers, consistently stating that those figures were commercially sensitive. It now appears such excuses helped management avoid revealing that the dramatic revenue growth being reported was being fuelled by constantly larger ledger purchases and focusing staff efforts on maximising the yield on fresh ledger purchases.

Underperformance of debt ledgers (lower debt collection rates) implies that management may have overpaid for them, reflecting negatively on its pricing discipline, which in the past, was perceived by us a competitive advantage.

With 65% of staff under 12 months of tenure, improving staff productivity, driving efficiencies of scale and hence profitability, might be more difficult than what was initially communicated to shareholders as the business now seems burdened with excessive costs.

 

[ROE]

Assumptions are being made that this is still a very good business, however I think just about every underlying assumption about this business needs to be questioned. Clime (CAM) sent an email to all Stockval subscribers today. Below is an excerpt of the relevant points which may cause some to question how good a business model CCP really has. Then again, these guys have been wrong to date, so no reason to think they are right now.

Why didn't they question this on the first profit downgrade and apply Uncle Benjamin Graham margin of safety?

If I was them I just take it in a chin and said we stuffed up, we sorry we lost your money....

I think fear start to take shape when you see your holding of $12 plummet to $1 and wiped out all gain as well a major capital loss.

Uncle Warren wont be proud Seeing people break his number #1 rule not to lose capital.

 

[dhukka]

Why didn't they question this on the first profit downgrade and apply Uncle Benjamin Graham margin of safety?

If I was them I just take it in a chin and said we stuffed up, we sorry we lost your money....

I think fear start to take shape when you see your holding of $12 plummet to $1 and wiped out all gain as well a major capital loss.

Uncle Warren wont be proud Seeing people break his number #1 rule not to lose capital.

ROE,

To Clime's credit they did ask those questions - several times as it turns out. Management assured them that everything was OK. Here is the first part of the email clime sent today.

We are deeply disappointed with CCP management announcing a second profit downgrade literally weeks after we had spoken to them in depth about the business and received assurances that all was on track with their previous announcement.

NPAT guidance for 2008 is now $10-12m (before circa $5m in restructuring costs); previous guidance was for NPAT of $17-19m without any restructuring costs.

Again, we reiterate, this was completely unexpected after several in-depth meetings with management over the past three months. During these, we had asked MD Geoff Lucas about all of the issues that now form the latest profit downgrade.

Direct questioning about many of these issues weeks ago gave us comfort that another downgrade would not be forthcoming.

Don't think I'm defending CAM here. I think they stuffed up, more specifically in the paragraph I posted before this post they said;

Management have always been protective of collection rates and prices paid for ledgers, consistently stating that those figures were commercially sensitive. It now appears such excuses helped management avoid revealing that the dramatic revenue growth being reported was being fuelled by constantly larger ledger purchases and focusing staff efforts on maximising the yield on fresh ledger purchases.

To me this means CAM did not really understand CCP's business. If CCP was not forthcoming with such information then that should sound alarm bells right there. I believe in the old adage; "never invest in anything you don't understand" Maybe Clime thought they understood CCP but I don't they fully appreciated the risks.

This may all be easy to say with the benefit of hindsight however, note that Clime mentioned what I posted in January last year on this thread about CCP possibly overpaying for ledgers. This was an obvious and very real risk, one I'm sure CAM was aware of but didn't go far enough in investigating.

 

[Snakey]

Well...entered this one again on my new buy fear, bear market stratergy
I think that people think... oh its going down tomorrow so i'll sell today..Go sheep!.. you help pay my bills
Anyway now im one of the nervios holders....I get thats what I get paid for ..being nervous
Good luck holders and when the uncertanty has been removed tomorrow im sure this thing will recover....because if it goes down the toilet im going to have to go back to work

 

[annalivia]

Also from Clime today....

"After our meeting with management, we have no confidence in their full year guidance. As such, we are not able to asses the intrinsic value of Credit Corps shares. The companys valuation has dropped significantly over the past three months from around $10.00 in October. Wether or not this business is investment grade will be considered post the half year result release on Thursday."

See what happens tommorrow.
I wiil wait for Clime to make a call and bail out if they bail out.

AL

 

[TheRage]

Also from Clime today....

"After our meeting with management, we have no confidence in their full year guidance. As such, we are not able to asses the intrinsic value of Credit Corps shares. The companys valuation has dropped significantly over the past three months from around $10.00 in October. Wether or not this business is investment grade will be considered post the half year result release on Thursday."

See what happens tommorrow.
I wiil wait for Clime to make a call and bail out if they bail out.

AL

Let's hope they don't bail out as this would be an awful large amount of shares being offered to the market if they do. Sp would fall throught the floor.

 

[dhukka]

Also from Clime today....

"After our meeting with management, we have no confidence in their full year guidance. As such, we are not able to asses the intrinsic value of Credit Corps shares. The companys valuation has dropped significantly over the past three months from around $10.00 in October. Wether or not this business is investment grade will be considered post the half year result release on Thursday."

Ouch,

Pretty harsh words from Clime, a good contrary indicator perhaps? Snakey I think you have balls as big as church bells to be going in a day before the half year report comes out. Could be a great move though, best of luck.

 

[Snakey]

Also from Clime today....

"After our meeting with management, we have no confidence in their full year guidance. As such, we are not able to asses the intrinsic value of Credit Corps shares. The companys valuation has dropped significantly over the past three months from around $10.00 in October. Wether or not this business is investment grade will be considered post the half year result release on Thursday."

See what happens tommorrow.
I wiil wait for Clime to make a call and bail out if they bail out.

AL

If they bail out then you will probaly recieve about 30 cents for your shares...as everyone else will bail out with them. I think in these situations its best to let things cool down before you make any decisions to liquidate. Give it a couple of weeks to sort itself out and for true value to show its face and then make a decision. I've been in a situation like this before(heavily invested in cazaly when it went from $2 to 45c over night it then bounced back to 80c within a week or two) and from experience its best not to panic. Im here now because I see value and scared and frustrated people who will make poor decisions under pressure. Remember and DONT FORGET, THIS COMPANY IS STILL MAKING A PROFIT!!!!

 

[annalivia]

DONT FORGET, THIS COMPANY IS STILL MAKING A PROFIT!!!!

On all available info they are still making a profit as we speak.

But I think you are right. I will wait a few weeks for things cool off.

I bought a very small amount at $6
A bit more at $4
And a whole lot more at $1
So I haven't lost the house yet.

AL

"Be greedy when others are fearful."

 

[ROE]

Fear start to take shape and they are not thinking clearly..
Let assume worse case scenario this stock go under
They own 2B ledger book ... surely they can sell them 5 cents in a dollar for those book ..some other debt collector will pay for it.

5% of 2B is bigger than the current market cap.

And with debt collection you don't always collect in 1 hit, you get people pay you $20 here, $50 bucks there on a fortnightly basis so money still trickle through.

Bring it on Fear I feed on them

 

[GOSAFAS]

Looks like this is another Centro waiting to happen. I don't know why I have a knack of getting involved with these rats and mice. Not sure what to do - I'm averaging $1.10 now. Do I sell and take a bit of pain or are we heading towards 30c?

 

[Buffettology]

Man, managements credibility is SHOT, but how can they get profit guidance THAT wrong only a few days before its announcement? If they do, this stock deserves to be punished and management should never be employed again, in any capacity, except for maybe a Woolworthes shelf packer (not sure if they would use the right price tag though)!

 

[Snakey]

Looks like this is another Centro waiting to happen. I don't know why I have a knack of getting involved with these rats and mice. Not sure what to do - I'm averaging $1.10 now. Do I sell and take a bit of pain or are we heading towards 30c?

Nice average... I see profit for you.. but your going to have to earn it with stress. Best turn off the computer and turn it back on on friday Go to the beach and watch the waves come in. Locking in losses today would be suicide IMO (see my above post)

 

[Snakey]

Man, managements credibility is SHOT, but how can they get profit guidance THAT wrong only a few days before its announcement? If they do, this stock deserves to be punished and management should never be employed again, in any capacity, except for maybe a Woolworthes shelf packer (not sure if they would use the right price tag though)!

The company predicts 6mil to 6.2mil ..only 3 or 4 days before the reports out..HOW MUCH ERROR CAN THERE BE?????mr buffet?
P.S Thanks for the down ramp (you may now enter)