Credit Corp had a very poor quarter after announcing a downgrade to their earnings expectations as well as a strategic review of the business. The downgrade was triggered by the poor performance of a forward flow arrangement, which has since been terminated, the rapid growth in debt collector numbers as well as an excessive increase in head office costs. The Managing Director resigned with the CFO taking over on a temporary basis and the new Chairman, Richard Thomas, taking a highly active role. Encouragingly, the company announced a dividend of 2¢ at the interim result and confirmed NPAT guidance for the full year of $10 to $12m pre-restructuring costs. We continue to hold the stock as, at current levels, the stock looks oversold; trading on a PE of 4 times 2008 earnings. Late in the quarter the company confirmed that $3.5m of cost reductions had been realised and that the decline in productivity had been arrested. We believe the company is putting in place many improvements which we believe will lead to a steady recovery in the company’s profitability in the next few years.
This is Antons Tagliaferro take on CCP 31/3/08. IML really scored when they sold out of CCP before it collapsed around the double digits. Then the mistakes occured,They bought back in.
15 nov 2007 5.04% at $6.00 a share
19 dec 2007 5.04% > 6.34% at $5.16 a share
15 jan 2008 6.34% > 7.64% at $4.81 a share
22 april 2008 7.64% > 9.51% at $2.21 a share
IML is committed to 9.51% at a poor price but they still believe in the company and are still buying.
Veduta Estates (harry Galleia) picked up his 5.31% in the 60c to 70c area on the 27 feb.
The news is all good but patience will be required especially for IML. RAB
CCP Price at posting:
0.0¢ Sentiment: LT Buy Disclosure: Held
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