Sorry Zwu, I have not delved too deeply into CLH. The report that Kiwoz suggested some weeks ago is well worth reading. It is at
http://www.**promotion blocked**.au/2015/06/30/i...ted-or-collection-house-limited-a-better-buy/
I held over 500,000 TGA in late 2014, so I wanted to shift some of that investment to an alternative, poverty stock, and CCP was a short-listed candidate. At that time the Price/Earnings Ratios of CCP and CLH were fairly similar, but CCP had a superior ROE and a stronger Balance Sheet, so it was an easy decision for me to focus on CCP. The respective ROE metrics are:
.......... 2006 – 2007 – 2008 – 2009 – 2010 – 2010 – 2010 – 2010 – 2010 – 2010
CCP ... 33.8 .. 29.7 ... 08.0 ... 14.6 ... 15.3 ... 20.2 ... 21.8 ... 22.9 ... 21.8 ... 21.3
CLH .. 08.0 .. 08.5 ... 06.4 ... 08.0 .... 09.7 ... 10.5 ... 11.6 ... 12.7 ... 12.0 ... 13.2
The more I delved into CCP, the more I liked it in ways that are difficult to quantify. Four points spring to mind – namely:
- CCP's CEO, Thoma Beregi, seems not to have put a foot wrong since taking over in 2007. The USA venture has not been a success, but neither has it been a disaster.
- The lesson learned from the behaviour that led to the 2007/2008 disaster is a valuable asset – CCP will not attempt to grow the business at a hectic pace again.
- CCP's business is more formulaic than most businesses, and management is prepared to give forward estimates, thus it is easier than most companies for investors to guesstimate results a year or two ahead.
- There are opportunities to keep staff usefully employed and to smoothen reported NPAT from the vicissitudes of the supply-price dynamics of buying PDLs, so CCP tends not to drop its profit hurdles when PDLs become expensive.
(20min delay)