Further to my previous post, you can take the NPAT and EPS guidance to be an accurate reflection of what FY22 results are going to be. That leaves one to worry what FY23 and beyond might be.
The way CCP's business performs means that one does not get a rapid deterioration of performance. If rot sets in, a few years can pass before it manifests itself. This means we need not fret about FY23. For further out than that, investment in PDLs and the Loan Book are significant, and for that reason growth of the PDL investments and growth in the Loan Book deserve focus. In the 26 April 2020, look at the first two rows:
The expected PDL investment has grown for FY22, so that underwrites collections for a few years. The expected Loan Book growth has expanded significantly, so that underwrites a healthy flow of debt repayments for a few years. We investors can sleep well for about three years, but one can be sure that the three-year cusion of comfort will continue to be pushed outward as time flows.
There is a small twist to the Loan Book growth, and that is that the upfront provisioning of loans inclines CCP to under report the true health of CCP's fundamental performance. In a steady state growth setting, over provisioning in any year tends to be offset by previous years. However, the value is there, it is merely hidden in the interest of conservative accounting.
Understanding the accounting of companies in this sector is very important, as is understanding the mindset (the attitudes to money management) of CCP's customer demographic, who behave like the grasshopper in Æsop's fable – https://read.gov/aesop/052.html
CCP Price at posting:
$22.79 Sentiment: Hold Disclosure: Held
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