Why did Credit Corp (CCP) shares fall following their results?
CCP -12.58%: the debt collection company kicked off reporting season today with a largely disappointing update regarding guidance. FY23 though was broadly in line with revenue of $473m and the dividend of 70cps both slightly beating consensus and Net Profit of $91.3m a slight miss. Lending was the main breadwinner for the company in FY23 and not the usual collections arm which is also reflected in the weak guidance provided. The company expects $90-100m in profit for FY23, a 4% increase to FY23 but a ~10% miss to consensus. They have also guided to $200-250m in ledger purchases in FY24, a ~30% drop from the year just gone which will put significant pressure on the company’s ability to hit expectations for outer years as the market expects profit to be ~20% higher in FY25 vs FY24 guidance. While this is a negative for CCP, it is a great sign of the strength in consumers given the low availability of bad debts to buy.
- Shares in CCP had rallied hard into the result, up 35% in the past 2 months. Given the large shift required in expectations, we expect CCP to trade nearer to 12-month lows.
