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CCP - Credit Corp Group

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Hi,

Have just begun in the market and am learning slowly... Have recently bought CCP stocks based on a consistent trend rise as well as being in the top 200 but not much else in terms of company research. Since my purchase they have declined... :(

What is the general consensus of this stock and would it be worth hanging onto? :confused:

Thanks in advance to all...

B.
 

michael_selway

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ilikegirls said:
Hi,

Have just begun in the market and am learning slowly... Have recently bought CCP stocks based on a consistent trend rise as well as being in the top 200 but not much else in terms of company research. Since my purchase they have declined... :(

What is the general consensus of this stock and would it be worth hanging onto? :confused:

Thanks in advance to all...

B.
Thsi stocks has been crazy sonce and continue to do so!

Good forecasts growth also

Earnings and Dividends Forecast (cents per share)
2006 2007 2008 2009
EPS 35.7 43.6 53.0 62.7
DPS 18.0 22.7 29.2 34.2

EPS(c) PE Growth
Year Ending 30-06-07 43.6 17.5 22.1%
Year Ending 30-06-08 53.0 14.4 21.6%



Date: 24/8/2006
Author: Marc Moncrief
Source: The Age --- Page: B5
Debt collector Credit Corp has registered a 97% increase in profit to $A14.4m for 2005-06. The company believes that rising interest rates provide an optimistic outlook for its business as more Australians default on their loans. It bought $A93.4m of debt in 2005, which more than doubled the 2004 figure of $A33.4m. However analysts pointed out that firms like it will find it tougher to collect debts in times of rising interest rates. Credit's share price leapt to $A7.73 on 23 August 2006, compared with $A3.50 a year ago

Date: 24/8/2006
Author: Stewart Oldfield
Source: The Australian Financial Review --- Page: 22
Credit Corp has achieved a market capitalisation of $A333 million. On 23 August 2006, the group's shares gained $A0.27 to $A7.73 as it announced a $A14.4 million profit for the year to 30 June. Over the period, the company invested in $A93.4 million worth of debt ledgers. Credit Corp has upgraded its target for debt ledger acquisitions to between $A80 million and $A95 million for the current year. MD Geoffrey Lucas says the company is examining developments in the US market but says it has no plans to enter it at this time
 

chops_a_must

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This one came up as a trigger tonight actually. Might be a good investment given idiots can't afford their houses anymore.
 
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ilikegirls said:
... Have recently bought CCP stocks based on a consistent trend rise as well as being in the top 200 but not much else in terms of company research. Since my purchase they have declined... :(

What is the general consensus of this stock and would it be worth hanging onto? :confused:
Hi ilikegirls,

Just a few my observations:

1/ The up-trend seems altered from the chart

2/ Directors and significant shareholder are reducing their holdings aggressively in the past a few months

3/ Increasing interest rate costs CCP more on loans, and reduces the values of debt ledgers.
 
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There are broker reports on creditcorp's website.

http://www.creditcorp.com.au/investor.asp?MenuID=3&TypeID=3

While the rating is high (I normally consider myself a "value investor"!), this is one I've sold in the past and wished I hadn't. They seem to consistently beat their own guidance, year after year. It seems that given what you're constantly reading in the paper about folks getting into debt, they'd have a large supply of distressed debt to choose from. As noted by a previous poster, the directors seem to have been selling down a lot of their holdings though.
 

michael_selway

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exgeo said:
There are broker reports on creditcorp's website.

http://www.creditcorp.com.au/investor.asp?MenuID=3&TypeID=3

While the rating is high (I normally consider myself a "value investor"!), this is one I've sold in the past and wished I hadn't. They seem to consistently beat their own guidance, year after year. It seems that given what you're constantly reading in the paper about folks getting into debt, they'd have a large supply of distressed debt to choose from. As noted by a previous poster, the directors seem to have been selling down a lot of their holdings though.
Hi would you say its a buy at current prices?

thx

MS
 
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Hmm, well if you're in it for the long term then perhaps, but I'd try to accumulate it below 8 bucks. Every now and then it gets whacked down to about 7.80 and then struggles back up to the 8 dollar mark again. Doesn't seem much likelihood of losing your shirt on it and assuming people keep on taking on debts they can't easily pay back, they should have a continuing supply of "customers" for their operations (ie/ the wind is at their back, which is never a bad thing).
 
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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
 

michael_selway

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dhukka said:
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
Hi thanks for the info guys

Btw dhukka do you hold CCP currently?

Also would you buy at current prices?

thx

MS
 
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michael_selway said:
Hi thanks for the info guys

Btw dhukka do you hold CCP currently?

Also would you buy at current prices?

thx

MS
MS no I don't hold any, I wouldn't buy at the moment - not because of the price but because I think there are other stocks out there with just as attractive growth prospects but with a better risk profile.
 

michael_selway

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dhukka said:
MS no I don't hold any, I wouldn't buy at the moment - not because of the price but because I think there are other stocks out there with just as attractive growth prospects but with a better risk profile.
oh ok which one sin particular?

thx

MS
 
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CCP has rallied past $9 from a low of 7.90 in a matter of days.

I can't see a reason for pricing at these levels. It seems to defy reasonable valuation.

Anyone have any insights on this?
 

bigdog

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There has no been much volume in recent days

Looks like a few pulling up the SP buying and selling

There are very few sellers which helps
 

michael_selway

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hueyt said:
CCP has rallied past $9 from a low of 7.90 in a matter of days.

I can't see a reason for pricing at these levels. It seems to defy reasonable valuation.

Anyone have any insights on this?
What is reasonable valuation may i ask?

thx

MS
 
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NPAT today reiterated by management to be in the range 18-19m. Therefore mid range forecast gives an EPS of 43c based on 43m shares outstanding (1850/43 = 43c).

Today's acquisition of a receivables management firm in Malaysia is not expected to be EPS accretive before 2008.
 
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exgeo said:
Today's acquisition of a receivables management firm in Malaysia is not expected to be EPS accretive before 2008.
Not entirely correct. The acquisition is immediately EPS accretive however will not be expected to make a substantial impact until 2008.

The acquisition seems sound and gives CCP an avenue of growth off-shore. Appears they are expecting the Malaysian debt market to follow in the direction of the US and Australia (ie. from agency collections to debt ledgers) and positioning themselves to cash in - as they have done tremedously well over the past 5 years in the aussie market.
 
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A lot of the other companies in the debt recoveries business are behaving like dogs (eg RPC / CLH)
I would have thought that these companies should be prospering with debt levels as they are.
After a good ride on CCP I am now looking at selling out, but not sure if they will keep powering on??
 

bigdog

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IMO the SP has been manipulated today as well as back early January where SP went from about 7.95 to 9.89 on small trades

Dropped back to 8.20.

Today opened at 9.42 and closed at $9.75 with small trades
-- note the number of times 54 shares was traded!

Has anyone else been closely watching CCP?

Today: 19-Feb-2007
Time---- Price-Vol---Value Condition*Codes
15:56:48 9.750 369 3597.75
15:56:48 9.740 31 301.94
15:43:54 9.740 400 3896.00 XT
15:05:18 9.740 319 3107.06
14:24:07 9.740 46 448.04
14:24:07 9.740 54 525.96
14:05:47 9.750 58 565.50
14:05:46 9.750 195 1901.25
14:05:46 9.750 124 1209.00
13:42:46 9.750 54 526.50
13:36:17 9.750 858 8365.50
13:32:52 9.750 54 526.50
13:32:51 9.700 1,846 17906.20
13:32:51 9.690 296 2868.24
13:17:44 9.700 54 523.80
13:17:43 9.670 551 5328.17
13:17:43 9.650 631 6089.15
13:00:23 9.650 54 521.10
12:59:35 9.650 54 521.10
12:59:25 9.650 54 521.10
12:59:15 9.600 2,500 24000.00
12:59:15 9.590 1,316 12620.44
12:30:28 9.590 284 2723.56
12:30:28 9.580 966 9254.28
12:30:06 9.580 54 517.32
12:00:18 9.550 1,000 9550.00
11:54:50 9.500 600 5700.00
10:43:54 9.450 85 803.25
10:31:12 9.440 100 944.00
10:12:02 9.420 1,650 15543.00
10:06:55 9.420 650 6123.00
 

bigdog

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The stock rallied hard from 7.90 to where it is now.. with the wisdom of hindsight, with the profit result, that rally has been warranted.

As for the drivers going forward, its hard to say.

On the one hand, deteriorating credit conditions means more opportunities. But if credit quality continues to fall... it'd adversely affect CCP.

It's a tough stock to analyse. Any thoughts?
 
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