CCP credit corp group limited

I agree with Pieoter – if you can, use SP weakness to top up. As...

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    I agree with Pieoter – if you can, use SP weakness to top up. As for the opinion of brokers, they are best not taken too seriously – analyse CCP's metrics, and decide for yourself.

    Every year CCP gives a guidance for the next year, and updates it a few times during the year. These updates and the final results have for as far as I can recall always shown improvement. I have created tables like the one below since FY2012. For FY2015 the picture was:

    ...................................... Initial ............ Updated .......... Updated ........... Updated ........... Actual
    ................................... Guidance ....... Nov 2014 ......... Dec 2014 ........ April 2015 ....... FY2015
    ................................... Aug 2014 ....................... confirmed Jan 2015 ..........................................
    PDL acquisitions ... $70m-$90m .... $80m-$90m .... $120-$130m .... $130-$135m .... $143.0m
    Net lending ............ $40m-$50m .... $40m-$50m ..... $40m-$50m ..... $40m-$50m ...... $35.0m
    NPAT ..................... $36m-$38m .... $36m-$38m ..... $36m-$38m ..... $37m-$38m ...... $38.4m
    EPS .............................. 78c-83c ........ 78c-83c ............ 78c-83c ............ 80c-83c .............. 83c
    DPS ............................. 39c-42c ........................................................................................... 44c

    For FY2016 the picture so far is:

    ............................ Initial Guidance
    ................................... Aug 2015
    PDL acquisitions ... $90-$120m
    Net lending .............. $30-$40m
    NPAT ....................... $40-$42m
    EPS (basic) ................... 86-91c
    DPS .............................. 44-46c

    One can reasonably expect the EPS to be 91c, and EPS to be 46c. The unsecured loans business was initiated to compensate for times when PDLs become too expensive to meet CCP's hurdles for rates of return, so the fact that the supply of PDLs improved towards the end of FY2015 meant CCP bought up big, and that may explain why its Net Lending was below par – the need to deploy funding into the Loan Book diminished.

    For reasons unrelated to business performance facts, CCP's SP at times declines, and one either ignores that and holds, or if one has funds, and one is not over invested in CCP, one can use the dips to add to one's holding. A company of this quality should enjoy a PER of about 15 or 16, so an EPS of 91c suggests a price range of $13.65 – $14.56. For the last 5 years the ROE in reverse order has been 23%, 23%, 24%, 23% and 22%. Most of CCP's other metrics are very good.
    As I have the guidances and actuals for FY2012, FY2013 and FY2014 prewritten, I post them below, but I'll not edit the spacing if the alignment suffers. You can see that management consistently under promises and over delivers:
    FY2012
    ................................... Initial............ Updated........... Updated....... Guidance...... Actual
    ................................. Guidance........ Nov 2011........ Feb 2012...... May 2012.... FY2012
    PDL acquisitions.... $45m-65m.... $50m-$65m.... $75m-$85m.... $84m-$88m.... $91.5m
    NPAT................... $21m-$23m..... $23m-$25m.... $25m-$27m.... $26m-$27m.... $26.6m
    EPS (basic)................46c-51c............. 50c-55c.......... 55c-59c.......... 57c-59c........ 58.4c
    DPS.......................... 23c-25c.................................................................................... 29.0c
    ROE...................................................................................................................... 23.49%
    FY2013
    ....................................... Initial........... Updated......... Redefined........ Actual
    ..................................... Guidance ...... Dec 2012........ May 2013...... FY2013
    PDL acquisitions........ $50-$70m.... $105-$125m.... $125-$130m.... $136.8m
    NPAT - underlying... $27m-$29m.... $27m-$29m.... $28m-$29m...... $29.9m
    NPAT – reported*..............................$30m-$31m..... $30m-$31m...... $32.0m 1-off litigation $2m
    EPS (basic) underlying.. 59c-63c.......... 59c-63c............ 61c-63c......... 65.2c
    EPS (basic) reported*........................... 63c-67c............ 65c-67c......... 69.8c 1-off litigation 4c *
    DPS.................................29c-32c........................................................... 37.0c
    ROE..................................................................................................... 24.44%
    * Actual 1-off litigation win transpired to be 4.6c per share.
    FY2014
    .................................... Initial ............ Updated ........... Updated ............ Guidance ........ Actual
    ................................. Guidance ....... Nov 2013 ......... Jan 2014 ........... May 2014 ..... FY2014
    PDL acquisitions ... $70-$90m .. $110m-$120m ... $125m-$135m .. $135m-$140m .. $145.2m
    NPAT.................... $31m-$33m .... $31m-$33m .......... $33-$35m ...... $34M-$35m ... $34.8m
    EPS (basic)................. 67c-71c .......... 67c-71c.............. 71c-76c ............ 74c-76c ....... 75.4c
    DPS............................ 34c-37c......................................................................................... 40.0c
    ROE................................................................................................................................ 23.23%
    Last edited by Pioupiou: 04/09/15
 
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