Why Is Share Price Tanking?, page-331

I am pleased to know you are still alive, so that I can ask you for the umpteenth time to provide the link that you maintained showed that AFTA or ASIC, or both, were gunning for CCP, and we could expect the turd to hit the fan. Also, by responding to your post, I can cover things that may interest other HC readers. To answer your two questions specifically:

Q1. . ."and collects on that debt." CCP financials disprove this!
A1. . . The Annual Reports shows “Purchased debt ledger collections”.

Q2. . ."debts from banks are regarded as best quality..." Who says so?
A2. . . CCP and PNC have said so. Extract Announcements, and search for “bank”. What debt portfolios sold in reasonable quantity do you think are superior?

English may not be your first language, so perhaps you do not understand the meaning of “collects on”. If CCP has a line item in a financial report called “Purchased debt ledger collections”, and money is reflected therein, that shows that CCP collects on debt. It would be ridiculous to suggest that CCP buys debt, and collects nothing. For FY2019 the metrics are:

Purchased debt ledger collections .. . . . . . . . . . $403,794K
Less: Purchased debt ledger amortisation . . . . -$183,789K . . 45.52%
Interest revenue from purchased debt ledgers . . $220,005K . . 54.48%

CCP buys debt portfolios, and for each $1 of face value, it typically pays about 23c, and it collects about 50c to give it a gross profit of 27c. In loose terms, CCP collects about half the face value of the debt that it buys. For lower quality debt, the price is lower, but the ratio of collections to amortisation remains fairly close to that 46:54 ratio. I am actually unsure what CCP pays for debt, but it would be about 20 cents. When Alan Kohler asked, Thomas Beregi gave a vague lower value, and a top value of 35c in the dollar, but I was left with the impression that the average was much lower than 35c. Obviously, if CCP actually bought a PDL for 35c in the dollar, it would collect more than 50% of the face value, probably 75c, to achieve the rate of return that CCP targets.

I have been watching this business sector for about a decade, and in that time both CCP and PNC have stated that they buy the better quality charged-off debt, which they buy from banks mainly, and to a lesser degree from utilities. CCP's FY19 Annual Report states, “In our debt buying business we purchase defaulted consumer debts from major banks, finance, telecommunications and utility providers.” If you look at the chart on page 16 you can see that for FY19, in the USA, CCP bought some $65m of bank debt, and only about $17m of other debt.

In Australia, as far as I know, Government agencies do not sell charged-off debt, but they do use firms like CCP to collect debt as a service. From NCML, CCP acquired a secure facility in Adelaide that met Government security standards for such work, and the Baycorp facility in NSW may do so too, because collections as a service was a significant part of Baycorp's business.