With the issues facing major competitors Pioneer and Collection House, and now the virus outbreak, CCP may be able to pick up much cheaper PDL books this year. However, that doesn't happen in a vaccum, it's the mild recession we are now in helping underpin that.
If there is a major quarantine such as in Italy, it would be a much worse recession, however temporary, and consumers may strongly resist paying back debts to CCP even if they have the money due to uncertainty. On top of the risks around higher unemployment preventing payment.
What's comforting though is that unlike the GFC experience, CCP has fairly low gearing (relative to industry and overall) of sub 30% and has 200m in dry powder to take advantage of any cheap PDLs that come on the market. The debt also doesn't mature for some time (2022 and 2023) so the company will not have refinance risk this year.
CCP Price at posting:
$25.05 Sentiment: Buy Disclosure: Held
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