Credit Corp [ASX:CCP] Sinks on FY22 Report

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Large debt collector Credit Corp Group [ASX:CCP] saw its shares plummet on Tuesday after flagging a weak outlook.

CCP shares were down 10% in late Tuesday trade and down 35% year-to-date.

ASX:CCP Credit Corp stock price graph


Credit Corp’s FY22

Credit Corp reported a 9% increase in net profit tax (NPAT) to $96.2 million, while annual investments were boosted by a US purchased debt ledger (PDL) of 80% on FY20.

According to Credit Corp, this was due to substantial improvements in ‘charge-off volume’.

CCP’s return on assets improved in FY22, as evidenced by the chart below:

ASX:CCP return on assets graph Credit Corp

Source: CCP

Credit Corp CEO Thomas Beregi commented on the results:

Market volumes have stepped up in recent months and further increases are expected during FY2023. As resource constraints are addressed, this segment will support consistent annual investment of more than A$200 million and be capable of producing medium-term earnings similar to those of the AUS/NZ operation.’

Credit Corp is also looking at expanding into buy now, pay later (BNPL) options and lending in the US. Initial trials (pilots) having begun, with more developments expected in FY23.

ASX:CCP credit corp cfinacial metrics table


Soure: CCP

CCP guidance and outlook

Due to unfavourable patterns in the year, Credit Corp said it doesn’t expect much of a recovery for Australia and NZ, and said that its US constraints aren’t likely to improve right now:

In FY2023 growth in US segment earnings is not expected to offset the impact of run-off in the AUS/NZ debt buying business. While FY2023 has started with a solid investment pipeline, regular investment is expected to moderate from the record levels achieved in FY2022. This should release substantial free cash flow, positioning the Company to secure any sizeable one-off purchasing opportunities that may arise in an uncertain economic environment.’

ASX:CCP FY 2023 table

Source: CCP

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Kiryll Prakapenka

About Kiryll Prakapenka

Kiryll Prakapenka is a research analyst focusing on investigating the biggest trends in investments. Kiryll brings sound analytical skills to his work, courtesy of his Philosophy degree from the University of Melbourne. A student of legendary investors and their strategies, Kiryll likes to synthesise macroeconomic narratives with a keen understanding…

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