I've longed it today on the dip - a bit hard to long something quite extended - however management have a record of being very cautious with guidance. There are three quite significant factors that make me confident about this stock.
1. The ratio of Gross collections to PDL assets was low in the second half at about 75%, mainly due to the level of acquisitions. This would normally sit at about 90 to 100%, and needs to catch up. 2. lending has hit critical mass, and looks like a long term winner now. 3. The US is on track for breakeven mid FY 17.
If you add up what #1 and 2 might mean for next year's npbt - you might be looking at PDLs up 25% on h2 for the full year roughly - so about $71m npbt possibly, and lending should be at least h2 16 x 2 plus a bit more which is $14m. So $85m pbt translates to about 59.7m NPAT. That is without adding something for the reduced USA drag. So an arguably optimistic case, based on what I see are reasonable geometrics, could have eps at $1.27 or more for FY 17. Guidance is $1.12. Eps has been growing at about 15% per annum roughly, so you in this era of financial repression, you might pay at least 15x to get $19.05 target SP, or based on guidance $16.80.
We'll see what happens soon enough. All IMO and not to be relied upon as more than fluffy conjecture.
CCP Price at posting:
$13.40 Sentiment: Buy Disclosure: Held
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