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CCV - Cash Converters

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Up again today with a high of 23c and closing at 22.5c.

Anyone who bought at the low in July of 11.5c has doubled their money. Unfortunately however I am not such a person.
 
I was in a cash converters the other day, wife next door at chemist warehouse lol, anyway their prices were a lot more sensible than the last time I was in there about 3-4 years ago.
I don't know if it is because of competition, or just more realistic pricing, but there was a marked improvement.
 
Great result - Revenue up, profits up, online revenue up, when adjusted for class action. But SP is down! Go figure.

Must be corona virus and the resignation of CEO (looks very amicable from the wording of the statement) that led this to being down. Bought in more first up. I believe this will be in the green today.
 
Another company (like TRS) that should do well when economic conditions are tough.
 
Having sliced my hands continually over the past two years catching this falling knife I'm quite happy this is well above 20 cents and now up to 29 cents - which is probably still undervalued - Class actions behind the company (well class actions that we know of) they have about 17 cents per share of cash backing, still sitting around 50% of book value, and probably still have a NTA below the SP. Without the class action the EPS from last year would be about 4.8 cents.

My worry is that I think the market must be expecting a dividend - which is why the SP has shot up. I would still rather they do not pay a dividend until the end of the year and look to grow revenues through acquisitions. I don't think EZcorp really needs the cash from a dividend.
 
An average result at the half for CCV @ $2000 total profit.... The first quarter was looking good (according to AGM) but second quarter must have been poor. They are blaming covid for hurting traffic in to their pawnshops and as such have written off a few million, otherwise it looks like profit would have been about $7.5 million. Loan book has grown considerably over the past 2-3 months so let's hope this actually translates to solid earnings.

I didn't fully appreciate that they needed to write off bad loan values upfront even though revenue occurs further down the road.

They still have 30 cents of net tangible assets, $65 million cash and at at SP of 24.5 cents today they are paying a 1 cent dividend (+8% fully franked). Looks like they can just pay a 1 cent dividend for eternity with zero growth. The value today is not as good as it was 2 years ago when it was in the teens, but I still keep more here than I do in the banks.

 
I know the annual reports will be out in the next few days, but going through their recent update from a month ago:
  • Loan book now increased by $22 million in the half to $214 million.
  • Cash on hand decreased by $7 million to $58 million (dividend payment was probably about $6 million)
  • Debt (from the $150 million facility) was drawn to $70 million - which I believe is the same as saying debt is undrawn to $80 million (in the half yearly) - So I take that to mean they've only spent their own money this half and none of the debt.
My thinking is that they could have easily kept the loan book the same and had an extra $21 million in cash this half which is about 7.0 cps annually???. I know things aren't that simple, but so long as these loans aren't entirely written off that's still a heck of a lot of $$$ to be generating at times like this - I'm probably missing something here. Surely over the next few months the pawn shops are going to be moving a lot more inventory now that costs at jbhifi, harvey norman, etc. are going up, Times getting tough and CCV will be the beneficiary.

I'll also note the overlords EZcorp who are American pawn brokers owning ~40% of CCV have had a very very good month on the stock exchange and have added to their ownership of CCV in the past 12 months. They have a market cap around $518 million USD and a loan book of about $200 million USD and make about $11-15 million per quarter (have a smaller loan book but a far bigger pawnshop footprint). If you strip out their intangibles/goodwill their MC is about 150% of the Net assets whereas CCV MC is about 80% of net assets with goodwill and intangibles removed.
 
Board Changes

Cash Converters International Limited (ASX: CCV) (“Cash Converters” or “the Company”) announces the following changes to the Company’s Board of Directors effective 22 May 2024:
 Independent Non-Executive Director, Ms Julie Elliott, has resigned as Director and Chair of the Governance, Remuneration and Nomination Committee;
 Independent Non-Executive Director, Mr Mark Ashby, will assume the role of Chair of the Company’s Governance, Remuneration and Nomination Committee; and
 Mr Andrew Spicer has been appointed as Independent Non-Executive Director.

Mr Spicer has most recently retired as Managing Director and Chief Executive Officer of Canstar Pty Ltd (‘Canstar’) having served in the role for the past 16 years.

Under his leadership, Canstar evolved into one of Australia’s most trusted brands, with over 2 million online monthly visitors.
Prior to Canstar, Mr Spicer played a pivotal role in the listing of WebCentral on the ASX and under his leadership, WebCentral grew into Australia’s largest web and application hosting company.
Mr Spicer’s corporate experience also includes executive roles at Suncorp Bank and consulting roles for Ernst & Young and McKinsey & Co, where he led major strategic, operational and performance improvement assignments for financial services and resource companies.
Mr Spicer stated “I am excited to be joining the Cash Converters Board. The cost-of-living crisis and tighter bank credit make Cash Converters’ services more important than ever in the sub-prime market, which now represents millions of consumers across Australia and the globe”.

The Company would like to thank and acknowledge Ms Elliott’s contribution to the Board, having served the Board diligently since her appointment in April 2020 and for providing invaluable support in her role as Chair of the Company’s Governance, Remuneration and Nomination Committee and as a member of the Audit and Risk Committee and Board Investment Committee.
Ms Elliott made a significant contribution to the Company’s governance and remuneration structure, practices and reporting.
Chairman Timothy Jugmans commented, “On behalf of the Board, I want to welcome Andrew to the Board. Andrew’s extensive corporate and strategic experience was specifically sought to complement the Company’s Board.
I would also like to thank Julie for her contribution to Cash Converters and wish her all the best for her future endeavors.
These Board changes are intended to enhance the Company’s Board and Committees so they are best placed to support Cash Converters operations and strategic growth opportunities.”

Authorised for release by the Board of Cash Converters International Limited.

i hold CCV
 
Director resignation.
Winding down of loan book
SP at 4 year lows and trending lower

Dividend ain't going to be 1 cent is it.... Probably have some horrific numbers coming for EOFY. Major shareholder has been accumulating for years but not recently
 
Cash Converters Renews and Increases Size of Senior Finance Facility
Highlights
• Senior finance facility with Fortress Investment Group renewed
• Facility size increased to $200 million from $150 million
• Pricing on attractive terms
• Provides growth capital for the personal finance lending business including new products

Cash Converters International Limited (ASX: CCV) (“Cash Converters” or “the Company”) is pleased to announce the successful renewal of the existing senior finance facility with Fortress Investment Group(Fortress) for a further term of three years.
The new securitisation facility has been increased in size to $200 million (up from $150 million previously) and remains priced on a margin over the Bank Bill Swap Rate (BBSW), with that margin on attractive terms.
The facility was last refinanced in June 2022, with the increased size of this new facility providing Cash Converters the necessary headroom to continue to grow its personal finance business.
Sam Budiselik, CEO & Managing Director of Cash Converters, commented:“Having conducted a wide ranging market review over recent months, advised by D23 Capital, we are pleased to confirm the securitisation facility renewal with Fortress on competitive terms.
Bringing forward our refinancing activities now also ensures that we can realise the benefit of increased headroom to support our ongoing loan book growth.
We appreciate the continued support from Fortress, which we believe is testamentto the quality of our loan book assets and the ongoing strength of our operational performance."

Authorised for release by the Board of Cash Converters International Limited.

i hold CCV
 
Cash Converters Exiting Small Amount Credit Contract (SACC) ‘Payday’ Lending

i hold CCV

hmmm

while this looks like a political win , will more be pushed into the arms of BNPL operators

interesting times ( maybe we even go back to the criminal loan sharks )
 

Attachments

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It's nearly a conspiracy... Governments crack down on all these old style credit providers while simultaneously letting BNPL go completely unregulated wild west style.

This looks like it has maybe turned the tables for CCV - possibly with the exist from the small credit loans they now qualify as a better company in terms of risk or ESG - and thus justify a higher earnings multiple? That's all I can think of for the recent upward trend. This has been an incredibly boring share for a very long time now. Or is it possible that with the exit of the SACC that the government may be more willing to allow a takeover? Thought they blocked the first attempt 10 years ago.

from memory NTA was around 29 cents per share - so they're now trading above NTA for the first time in a long time. I'm very interested to see the EOFY numbers... It's one think I dislike about reading the balance sheets - unless you're an insider - you can't really trust what they say about investments made today delivering tomorrow and trying to tell if they're lending out $1 today to make $0.95 or $1.10 tomorrow.

At some stage I need to explore dumping the shares. They were always a capital gain target but quickly became a dividend paying staple. a 2 cent divi fully franked on a low 20s share price was best on the ASX for the past 5 years. I hate how working out tax/capital gains ends up driving investment decisions but if this keeps going higher I will almost certainly offload some once the results are out (if dividend stays unchanged and profit stays similar)
 
Hmm. Academically? Good EOFY result. Practically? Disappointed...

3.9eps profits - a nice jump but it does not translate to money for shareholders.
1cps dividend remains unchanged - this is now 10 x in a row. Was fantastic when SP was 20 cents. at 35 cents - its good - but not fantastic.
$75 million in cash balances.... Why??? What is the point??? use it - pay it out...what is it doing???
Net assets more or less unchanged YoY = 1.4% increase - so profit being turned in to intangibles potentially from overpaying for franchise stores.... Hope those stores are generating real cash profits...

Nothing in the presentation or annual report regarding in increase or payout ratio of dividends. I couldn't be bothered to listen to the phone call and find out if anyone else asked. But I'm guessing they have no desire to increase the dividend.
 
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