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19/02/23

17:45

Post #: 66335922
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Originally posted by tomhagen: ↑

I understand what you're saying. I don't think it mutes my point.

The level of collections on their current book ($586m collections on $308m) is pretty standard. On page 30 of the half yearly report - you can back solve how much they expect to collect from the book.

View attachment 5072869
The difference between "cash collections" and "interest income accrued" is how much of the book is amortised. Collections/amortisation is 2.02. 586/308 is 1.9 so that's around where it should be, if it's not, it should be written down. CCP has been around 2.0-2.2 for over a decade.

My point however it they need to sustain the current level of collections, but have only $60-70m PDP purchasing capacity - just to break even given the interest burden. In your data table - PDP investment peaked in FY18, the following year (FY19) collections peaked and then declined the year after (FY20).

If this same scenario plays out with PDP investment peaking in FY22, collections peaking FY23, and then declining in FY24 - this is not sustainable, because the company will go from breakeven to loss making.

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My point however it they need to sustain the current level of collections, but have only $60-70m PDP purchasing capacity - just to break even given the interest burden. In your data table - PDP investment peaked in FY18, the following year (FY19) collections peaked and then declined the year after (FY20).

Sure I understand that. I was really trying to highlight that they don't have an issue servicing their debt, far from it. And the incremental cash flows from PDP purchases even with a modest amount of leverage are, quite frankly, pretty absurd. I'd be pretty surprised if the intention from here is to try and fund growth purely from cashflow, or cf+equity. The cashflow profile is so weighted toward the front that a moderately geared PDP purchase could be repaid within 12 months.

This has always been a financial leverage play, imo. PDP's just happened to be the vehicle.

Last edited by bcc_100: 19/02/23

PNC Price at posting: 34.0¢ Sentiment: None Disclosure: Not Held
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0 Great analysis

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