1) debt revenue went up +15%, but debt npat +11% which means margins declined.
2) they lost some forward flow contract to competitor, so if pricing is easing, AND they are losing market share...
3) with the core debt business margin decline, the incremental growth is driven by lending. Yes, we expected this, but it is low quality growth. I would rather see investment into growing the debt businesses than fcking around with payday lending.
4&5) if you were a shareholder during the near death experience, you will know that rapid PDL growth coupled with debt and growth in staff numbers is a deadly combination. Too rapid growth in staff numbers will see the productivity fall. Thomas said himself that to swallow more PDL's theyll need more staff.
I dont mean to sound negative, but it sounds like market conditions are slightly less favourable than they have been in the past in the core debt business, and alot of the EPS growth is low quality driven by non-core growth in lending coupled with balance sheet leverage.
CCP Price at posting:
$17.52 Sentiment: Buy Disclosure: Held
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