The share price of Credit Corp Group Limited [ASX:CCP] is up more than 5% at time of writing.
This is impressive, seeing as their shares were down 7.32% on Friday.
The drop came after a trading halt requested by the company, which was issued by the ASX on Thursday 21 June. That halt was lifted when Credit Corp released an announcement on the ASX, which occurred at 11:50am on Friday 22 June. It was after returning from that halt that Credit Corp saw its large decline.
In today’s trading, Credit Corp have already recovered much of Friday’s losses.
Why such a drastic fall, and rise?
In their official ASX response, Credit Corp outlined the reason for this trading halt request, which was to ‘avoid the prospect of the ASX imposing a temporary suspension’.
Credit Corp was the subject of a nasty research report shared by an anonymous source.
This report accused Credit Corp of behaviour which would negatively affect their business model and success.
Accusations include the company being a ‘payday lender’, unofficially employing workers, and issuing loans to unsuitable clients.
Such claims paint Credit Corp as irresponsible and unreliable. This would likely have upset the confidence of shareholders.
The trading halt was issued to give Credit Corp time to prepare their response. This was to ensure their shares were not too drastically affected by the allegations.
In direct response to the accusations, Credit Corp wrote:
‘Credit Corp competes with “payday lenders” to provide consumers with a better alternative…a simple on-line process at a fraction of the cost of a “payday loan”.
‘Credit Corp practises responsible lending…Our process meets and exceeds legal requirements.
‘The report confuses our encouragement of applications with our loan approval criteria.’
And, to remove all doubt, the response also bluntly states: ‘The analysis contained in the Report is erroneous.’
What this means for Credit Corp
Credit Corp insists the harsh allegations made in the anonymous report are inaccurate.
The company concluded in their ASX announcement that Credit Corp ‘is experiencing strong operational performance over the final quarter and re-affirms its FY2018 market guidance.’
This guidance shows 16% NPAT growth in this financial year, and further expected growth in FY2019.
Credit Corp seems to be remaining on track, despite the recent hurdle.
For Money Morning