The thought occurred to me this weekend that the 6-year...

The thought occurred to me this weekend that the 6-year statutory limit does not mean that the collections stop after six years, because each payment is a reaffirmation of the debt. There is not much point debating this, because from a pragmatic perspective, the value of that old debt would be insignificant to CCP's profitability.

The real reason for this post is to get an informed discussion going on future years' EPS, especially FY20. Management Guidance has given us a good handle on what FY19 should be.

With CCP, one can usually run with the upper end of Management's guidance, which is given at the beginning of the financial year (typically August), and updated in November, again in January and yet again in April, but these months can change slightly. For FY19 we have:

• July 2018 guidance 140-144 cents
• Nov 2018 guidance 140-144 cents
• Jan 2019 guidance 144-146 cents

One can hence expect EPS will be 145c for FY19. My guesstimate for FY20 is the range 165 – 170 cents, based on the following reasons:

• Unsecured Lending business should power ahead in an environment where the banks are restricting credit, and the minnows are more expensive than CCP is.
• The US PDL business will perform well in respect to volume, and costs averaged to volume should decrease.
• As for Australasian PDLs, I think Management will buy what it needs to keep its collections teams busy, and it would, I imagine, favour diverting funds into the Unsecured Lending business to establish a dominance there, and investing in US PDLs to obtain critical size in that market. On the so-stated elevated PDL prices in Australasia, it may well suit CCP to let its competitors feast on those for a while, and CCP can return with a vengeance when it has achieved a better balance between its three businesses.

Any FY20 EPS guesstimates would be welcome, as well as relevant comments.