The recent capital raising proved to be a masterstroke. Before today, I had expected CCP to rapidly grow their US debt ledger purchases and consumer loans business. With the extra equity and debt capital available, invested at a ROIC of around 13% over the next four years (to restore their normal gearing level over that timeframe, while assuming a reasonable upper limit to the amount that could realistically be invested each year), my calculations had already indicated EPS growth of between 16% and 24% over the next four financial years. This equates to a doubling of EPS over that 4 year period. Of course my calculations could be wrong, so I invite others to check and comment.
This could now be accelerated due to this acquisition, if they can earn at least 13% on the new capital invested in this acquisition and still rapidly grow the US and loans businesses. I expect they would not have made this acquisition if they could not achieve this level of profitability.
The unknown for me is what P/E level will the market deem appropriate in this economic climate and interest rate environment for a company which, in my opinion, can double EPS over 4 years or less? I for one think that P/E will increase as the higher growth rate becomes apparent.
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