Creditcorp is acquiring the assets of the old Radio rentals business. Purchase was funded entirely by excess cash.

CCP will now be operating in the appliance leasing business. I am slightly confused at this one. The collections side of this business operation should be in CCP wheelhouse, but managing and operating distribution and supply chains for appliances I'm not too sure. Is appliance leasing still a thing nowadays with afterpay like installment based 0% interest products available? Confusing to me, and I'm interested to see how this pans out once the rubber hits the road.

https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02459763-2A1342346?access_token=83ff96335c2d45a094df02a206a39ff4

Credit corp releasing full year reults today, with financial results in the middle of previous guidance. There are a lot of things to take in, and will do a full analysis when i have more time to dig deeper into it. My first initial thoughts are:-

• PDL investment in FY21 shrunk. This appears to be due to stimulus and money supply during the last year providing less opportunities for CCP to purchase. Creditcorp are extremely disciplined purchasers and i dont expect management to make any PDL investment unless the opportunity is appealing. 
• On the flip side the company is flaggin that the pipeline for PDL investment in FY22 is looking strong. Especially in the USA which is their biggest growth engine. 
• Operating metric of collections per hour is improving. This metric seems to get better and better every year as the company's systems improve over time and they introduce better collection technology. This should drive improved margins over time. This really shows through when you look at the revenue line for the AUS/NZ debt buying side of the business went down by (3%) but NPAT for this segment was up 11%.
• USA debt buying scaling rapidly with NPAT increasing from $8.1m to $17.7m. This is still a small percentage of the profitability of the company, but if they continue to execute their strategy, the revenue and profits should accelerate as the segment increases as a % of the business.
• Strong cash position, with no debt and significant undrawn facilities, puts CCP in a strong position to take advantage of opportunities. 

Credit Corp reports return to strong growth trajectory

Credit Corp Group Limited (Credit Corp or the Company) reports the following highlights for the 2021 ancial year:

•        11% increase in net profit after tax (NPAT) over the prior year to $88.1 million 1

•        Strong US segment result, with NPAT doubling to $17.7 million

•        Near record purchased debt ledger (POL) investment outlay of $293 million 2

•        Record second half gross lending volume of $105 million

•        Record committed FY2022 starting POL investment pipeline of $150 million

•        Substantial investment capacity with cash and undrawn lines totaling $372 million

CCP H1 release see attached.
HIGHLIGHTS:-

• 10% increase in NPAT to $42.3m
• Strong US debt purchaser PDL doubling $8.0m NPAT
• Record half yearly PDL investment driven by Collection House purchase
• Strong recovery in consumer lending volumes in December quarter
• Upgraded full year outlook to the following:-
  •  Forecast NPAT $85 - $95m
  • Forecast EPS 126 - 134c

I think the market underestimated the benefits of the macro environment for CCP would have. Tailwinds are definitely coming through now with 2 x upgrades in 3 months. 

The company appears fully priced now. But i am a happy holder. 

The Aus Govt announced reversal of responsible lending laws on Sept 25th 2020. Since that day Creditcorp has rallied ~27%. Is this a coincidence? Or is the share price just bouncing within a range? Maybe the market thinks this is a genuine tailwind?
If CCP holds above $21 id say the market thinks its the latter. Which I agree with. Irresponsible lending leads to more bad debts and more opportunites for Creditcorp. 

Credit Corp are the best of breed here in Australia. The management is excellent with proven track record. Their competitors have literally been falling over and i expect Credit corp to strengthen its dominance and increase market share here. I see this as an easy turnaround story with great upside in the next 2 years.

Its primary growth though is in the USA where it is relatively new player. Management have confidence their systems and processes are market leading and will serve them well as they penetrate the large US market. With collections in the US up 55% over the last year i expect this trend to continue, with a long growth runway overseas. Their growth may be slightly impaired FY21, but i am expecting FY22 to be a real breakout for Credit Corp in terms of growth. Balance sheet has been beefed up with a recent capital raise, which was used to pay down some debt and position themselves to take advantage of opportunities which arise.

Its financial metrics are quality for this type of business;

5-year ave ROE~20%

5-year ave ROC~14%

net margins~22%

Debt/Equity~0.09

Longterm EPS growth rate ~14.51%p.a