The best way to value CCP is like anything else that can be...

The best way to value CCP is like anything else that can be viewed as a stream of cashflows.

Using a P/E doesn't work because this business is like a mining company. Unless it keeps purchasing PDLs and originating new loans, the ROM runs out (i.e. its existing book runs off.) This means it needs to keep purchasing/originating increasing levels of ledgers/loans in order to keep generating growth (assuming the extraction/yield remains constant).

Because the level/volume of debt origination and purchasing (in particular) in CCP's case is a variable which management have a great deal of discretion over (until they reach the limit of their own borrowing facility covenants), they have an enormous amount of control over the earnings outcome in a normal/good credit environment. If three months out from year end, you're a few % below target, you just pony up an extra ~$20m of PDLs, and due to the front-end loaded cash collection profile (like a newly spudded oil well), the additional outlay gives you some higher efficiency feedstock to collect on to make your profit target.

So when valuing a debt purchaser, you need to keep in mind that there's a lot of ongoing investment required to keep the thing chugging along, and that the extent of this investment is not wholly captured in the profit number to the extent the amortization charge is undercooked.

Then you get another issue because debt ledgers are like crops because they have 'self-regenerating' characteristics. I.e. if you buy a credit card debt for 15c in the dollar, and book it at that price, there's a chance you'll be able to collect many multiples of that between recoveries and interest/fees over the seven odd years you have to work with. By the same token, it could also be a total write-off. Importantly, the average total cash collected is ~230% of the investment, which covers costs and leaves a profit.

The other catch is that the low P/E reflects several layers of credit risk. When you take on debt to purchase debt, you are exposed to the credit cycle both through spreads and through credit risk. If something went bad with the Aussie consumer and credit serviceability started feeling the pinch down under, you probably wouldn't want to be holding a lot of CCP.