Ferret's Stock to Watch: CREDIT CORP GROUP LIMITED 08:25, Friday, 27 August 2004
TURNING DEBT COLLECTING INTO A FINE ART OF MAKING MONEY
Sydney - Friday - August 27: (RWE) **********************************
OVERVIEW ********
Debt collectors should make money, particularly one with top drawer clients including banks and credit card operators.
Credit Corp Group Ltd's clients read like a Who's who in business and they must be meticulous that collecting outstanding debts are done with finesse and sensitivity.
The company's client list includes the ANZ Bank, Westpac Banking Corporation, Diners Club International, Commonwealth Bank of Australia, Citibank Australia Limited, Commonwealth Department of Education Science and Training, Dow Jones Australia, Key Equipment Corp, Australian Stock Exchange, Credit Union Services Corporation Australia Limited (CUSCAL)and NSW Local and Regional Councils.
Of course Credit Corp Group has a lot more irons in the fire than this.
Division services cover Credit Corp Banking, Finance Collections and Trade Collections,.Legalforce Government Recovery Services, Credit Corp Debt Purchase Services, Legal Process Serving, Support Field Agent Support and Services Document Lodgement.
It's often the way that at a time when business is booming so is debt collection.
One would think it would be the other way around but there are many people around who forget caution and spend like there is no tomorrow.
Anyway Credit Corp Group produced a very impressive result.
Not only was its net profit for the past year up 60 per cent to $5.35 million, with even greater growth of 123 per cent in EBITDA to $16.49 million, but the company also painted a bright picture for the year ahead.
Managing director Simon Calleia forecast further growth, providing market guidance of a 2005 net profit of $7.1 million and EBITDA growth of 75 per cent to $29 million.
You don't often get companies issuing such detailed guidance for the year ahead on the day of the announcement of the profit result for the year just finished.
It's hardly surprising that the stock has become a market delight.
SHARE PRICE MOVEMENTS *********************
Shares of Credit Corp yesterday put on another 8c to $2.73, equalling its rolling high for the year. Low was $1.20. The shares have now doubled from $1.20 a year ago to $2.40 ahead of the announcement. Given the company is heading for its third big profit rise in a row it's no wonder. EPS in the past year was almost 15c, and next year will be about 20c. At yesterday's prices the stock is on a future p/e of about 13 times. Full-year dividend is 7.45c, 46 per cent higher than 2003.
Mr Calleia says management is now focusing on the 2006 and subsequent years, "comfortable with the infrastructure in place to deliver the 2005 results".
The past year's result was driven from group revenues of $27.68 million, being 67 per cent higher than the prior year.
Directors noted that the large percentage increase in EBITDA demonstrates the capacity to deliver substantially higher revenues while driving cost efficiencies due to scale.
The company expects these benefits to continue.
Credit Corp's focus is on the effective management of the recovery process providing clients with an efficient and cost effective alternative for their debt recovery needs.
Many businesses use Credit Corp's facilities as an extension of their receivables, collections and loss recovery departments.
This enables them to successfully leverage off skilled personnel, specialised operational infrastructures, customised technology solutions and innovative strategies to maximise recoveries, contain delinquency and reduce days past due.
BACKGROUND **********
Credit Corp Limited was listed on the ASX in September 2000.
It specialises in providing an innovative range of Debt Management and Support Services to major Australian and international organisations.
Companies within the group have been operating since 1972 and comprise a number of specialist divisions dedicated to servicing key segments of the receivable management cycle.
In fact, the combined businesses of Credit Corp have been innovators in their fields for over 30 years.
From the beginning we have been pioneers, undertaking the first commercial purchase of written off debts from a major financial institution in Australia.
Since then, the company has firmly established itself as one of Australia's largest and most successful providers of Receivable Management and Legal Support Services.
Credit Corp achieves its best results by integrating seamlessly as an extension of our client's internal operations and business processes. It is this flexibility that sets us apart from the competition.
By working as a partner, rather than a contractor, Credit Corp provides clients with access to expertise and innovation, superior service and reduced operational costs.
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