Yes - next years cashflow will be abnormally high given the collections are based on record prior purchases (high operating cash flow), and pdl purchases will drop (lower capex). You need to work out what sustainable collections would be for say $70-90m/pa of purchases (capex) which will tell you what the normalised free cash flow is on that basis.
Earnings however, will probably be lower than cash flow given upfront provisioning for lending.
This baby has been spitting out cash for a while now. I wish they would talk down their prospects and the share price massively and get on with an aggressive buyback.
I just don't see them having an edge in secured lending - why compete with the banks for a 15-18% ROE? On paper, the maths suggests lending is ok, but strategically is it all that smart? I see some merit to offshore expansion but at the end of the day is there any scale benefit operating in two disjunct markets? It sounds like a duplication exercise. ie doesnt sound like they will leverage the manila call centre in both Aust and US, nor will there be any relationship overlaps in terms of purchasing.
CCP Price at posting:
$9.69 Sentiment: Buy Disclosure: Held
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