The short answer is NO. This is because CLH and PNC do not have a Thomas Beregi as CEO, supported by a chairman like Don McLay – two men who have not forgotten CCP's bad experience in FY2009. The difference between CCP and its competitors springs from the different mindsets of their top management. If the long-term mindset changes at CCP to a short-term one, then the company could also go down that broad road to hell.
Because I do not hold either CLH or PNC, I have not spent time analysing them, so this post may be flawed. The poster who holds CCP shares and knows more than I do about CLH and PNC is tomhagen. It is one of his posts that alerted me to the fact that CLH sells its forward cashflows to fund its immediate needs, and this also moves profits forward, which looks good in the short term at the expense of the longer term.
CCP had its exuberance-driven near-death in FY2009, and the hero who saved the day was, IMO, Thomas Beregi, CCP's current CEO. Beregi joined as a mid-level finance manager at the point when hubris met its nemeses. When the old guard left, he stepped in as acting CEO, and set about saving the company. Part of the post-hubris clean-up was a boardroom revolution, with Don McLay becoming the Chairman, and he is still there too. Don recognised Beregi's ability, and fairly soon the latter was formerly appointed as CEO. Both men sing from the same hymnbook.
The CCP FY2009 problem was caused by rapid acquisition of PDLs in years ending FY2008. When one buys PDLs, the fresh ones are easier to collect on, and after two years, a PDL's rate of collections declines. What remains uncollected would be overvalued if PDL amortisation earlier were too low. Under amortisation in double-entry accounting causes the PDL carrying value to become inflated, and expenses reduced (and hence inflated NPAT – a short-term sugar hit). I believe that PNC later went down the same hubristic path as CCP had experienced years earlier, and as long as the purchase of PDLs was accelerating, things looked good – the SP rose, more money could be borrowed and raised via share issues to buy more PDLs, and the CEO became a poster boy (like happened with Steve Grove of ABC Learning). CLH probably went, but less frenetically, down the same road with FY2015 being reported as a bonanza year, and FY2016 saw a small reversal. CLH's management changed, but not the company's management style, and it is in trouble again.
Both CLH and PNC have lost the support of mainstream bankers, and probably the investing public, so they must resort to alternative sources of finance, and pay the required pound of flesh. In contrast, CCP in its dire position in FY2019 was able to go to its bankers with evidence of the effectiveness of the new team and the security of a credible PDL carrying value, and thus borrow funds at reasonable rates with reasonable covenants. CCP's current banking facilities for its loans business, and PDL business, caps loans to 50% and 60% respectively. As at 31/12/2019 CCP had debt headroom of $170m. CCP's lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes. If CCP so chooses, it can lower its investments in loans and PDLs to meet the prevailing circumstances. CCP's debt to equity ratio has tended to range between 30% and 50% – it bounces about because PDL acquisition is a lumpy business, often opportunistic.
That is my rosy picture. Get a few contrary views, and the basis for them, then figure out your own view. One criticism of CCP that I have is that by now there should have been another Covid-19 update, especially on the impact on call centres.
CCP Price at posting:
$14.14 Sentiment: Buy Disclosure: Held
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