Ann: CLH ASX Release, page-57

Thanks for the great discussion that’s happening in the thread. It piqued my interest so I had a quick look over PNC this morning.

While I don’t deny that if PNC could have a chance at multi bagging. But gee, they’re cutting it fine. Looking at the last set of accounts:

• Minimal cash after adjusting for trade payables.
• $290m in debt facilities of which $263m is already drawn, and only $26m remain undrawn
• Free cash flow was $23m for FY22 (operating cashflow and rent) before PDP investments. If they’re targeting $60m PDP investments in FY23, FCF better improve by at the very least +$10m (or cap raise, new funding, etc) or there will be a cash crunch.

I also wanted to highlight the difference in accounting between the two companies.

• PNC FY22. $106m collections, $265m PDP on the books. 0.36 ratio.
• CCP FY22. $535m collections, $637m PDP on the books. 0.84 ratio

One can argue that one book is more mature than the other (though CCP’s US book is also quite immature), and so forth. But that wouldn’t account for the magnitude of the difference in the ratios.

As @Pioupiou has pointed out many times, Credit Corp is in a great position simply because they have 3 different places to allocate capital vs the 1 for PNC - Aus/NZ PDLs, USA PDLs and Aus consumer lending. In August, they only had $30m of Aus/NZ PDLs contracted (vs $39m for PNC) - so it’s the segment they feel is the least attractive in terms of return on capital and is willing to have the smaller #2 player outbid them and cede “market share”.

PNC - with debt facilities just about tapped out and a depressed share price - needs to grow themselves out of their current situation in a backdrop of rising interest rates and elevated Aus PDP prices (using CCP’s reduced investment as a proxy). It’s hairy.