Thanks for your detailed response. I have been otherwise...

Thanks for your detailed response. I have been otherwise occupied over the last few days, but I'll now comment on your post point by point.

1. I have no problem with an EPS forecast FY2016 of 92c, and 99c for FY2017. Many weeks ago I wrote that I expected the uplift to be 10%, based on the premise that growth should be Retained Earnings Percentage times ROE. Using Morningstar metrics, the calculation would be 83c*(1+(0.213*(83-44)/83)) = 91.3c. Adding another 10% would give a FY2017 estimate of $1.00.

2. PDL acquisitions in FY2016 could grow because the tight supply eased in H2 of 2015, and the annual report stated, “. . . second half purchasing secured a near-record PDL acquisition outlay of $143 million. A moderation in price growth from late in the first half facilitated the successful renewal of expiring forward flow contracts along with additional volumes. PDL acquisitions were $87 million in the second half, compared with $56 million in the first half.” CCP has committed to purchasing at least $60m worth of PDLs by 31/12/2015. This metric can bounce around significantly at the discretion of management, and hence any viewpoint can only be held with a large latitude for error. If FY2016 looks very good, management may well favour investing in the Loan Book - see Point 3.

3. I have not thought too much about the profitability of the lending business, but it should contribute nicely to FY2016's NPAT now that CCP seems intent to slow the growth of the Loan Book, and thus reduce the short-term loss-making of provisioning. If EPS for FY2016 looks like exceeding $1.00, management would probably increase the Loan Book to smother the excess increase, and set up FY2017 and FY2018 for an easy run.

4. You may be right about management preferring to grow the Loan Book. As hinted at Point 3, it is a wonderful vehicle to shift profits out of FY2016 into FY2017. I simply bumped the number up, because CCP has a history of doing that.

5. I should have made it more patent that I was deriving a subjective valuation, which is not the same as predicting what the market would do. My view of CCP is that it is a share that I would buy when the market undervalues it, provided I have funds. I have often wondered why CCP occasionally gives investors a chance to top up, but reading recent announcements may provide a reason – large foreign shareholders selling for reason's unrelated to CCP's rude health – a declining Australian Dollar for one.

The loan business is going to be a superb vehicle for steadying CCP's statutory EPS trajectory over the years. The business is fundamentally as profitable as the PDL business, but the accounting treatment has a built-in profitability lag. There are other smoothing factors at play – for instance, the ability to slow PDL purchasing, and focus on collecting older debt.

On investors fretingt about China and other issues, although I accept that it affects CCP's SP in the short to medium term, I do not believe it has much affect on the underlying business, and hence the SP in the long term. The benefits of a straitened economy to a debt collector and sub-prime lender outweigh the downside of collecting debt more difficult.