Australian Investment Blog

ASX:CCP 22/06/2018

Credit Corp falls on short sell report

Stock

Credit Corp (CCP) $17.74 as at 22/06/2018

Event

The debt collection company was reinstated today after responding to a random report that attacked their business model and accounting standards, initially falling ~20% before recovering to now trade ~6% below Wednesday’s close price. The report by Checkmate Research questioned the earnings history of Credit Corp, saying the company’s earnings have been too stable for such a high risk and volatile business. The report also questioned Credit Corps lending arm, considering it a ‘payday lender’ and using loopholes in legislation to avoid such a classification which would greatly increase regulatory oversight and funding costs – Westpac is just one of many lenders that refuse to provide capital to payday lenders. Credit Corp has since refuted all of the claims made against them from the report and reaffirmed guidance for the 2018 financial year. Credit Corp (CCP) Chart Credit Corp Chart

Market Matters Take/Outlook

Although the report has been refuted and doesn’t show clear evidence for many claims, no doubt many will start to question whether or not there is a soft underbelly to CCP, particularly relevant after the Glaucus’ attack on Blue Sky recently that has seen the stock price fall over 80%.

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