Debt collector CCP has halved from its 2021 high and while we held a neutral to mildly bullish view through August we didn’t once consider buying the stock’s weakness following its early August result:
- Net income of $100.7m was ahead of the $96.6m expected, and a final dividend of 36cps was basically inline.
- Their profit result equated to a 14% increase on FY21 which was a solid outcome, however, their guidance for FY23 was the issue – they are guiding to a lower net income of $90-$97m.
Weak guidance has been the largest weight on the ASX through Augusts reporting season as management has been conservative in their outlook. On 13.7x FY23 earnings CCP is still around fair value in MM’s view but if the stock follows a similar path to that outlined for SGR we can easily see ~30% upside – note the stock traded ex-dividend 36c fully franked yesterday.
- We like the risk/reward towards CCP into fresh 2022 lows – a common theme!
MM likes CCP ~$18
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