CCP +13.95%: Rallied today after reporting FY24 results that on an underlying basis were mildly stronger than expected, though that wasn’t as obvious when the numbers first hit given an impairment and change in accounting estimates to do with collections i.e. lengthening the collection life cycle assumption from six years to eight years for accounting purposes had a negative impact. Looking through this, the debt collector reported underlying net profit after tax (NPAT) of $81.2m vs consensus of $73.5m while the dividend for the 2H of 23cps was ahead of expectations.
The key for future earnings is around the cost and availability of debts to buy, and to that end, their Purchased Debt Ledger (PDL) was marginally better driven by the Australian business, as the US continued to underperform. For guidance, they said a record starting consumer lending loan book, US operational improvement and a stabilised AU/NZ debt buying business should produce FY2025 NPAT of $90-100 million.
- Assuming the mid-point of $95m, that guidance was a shade above the current consensus of $93.8m, and implies a17% increase relative to FY2024.
Shares have been weak going into the result and they talked a more positive game on the call today – all in all, a solid update met a bearish market, and the stock rallied. We’ve had no interest in CCP in recent times, however, today’s result is more positive than we expected.
MM has turned mildly positive CCP
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