Credit Corp: Lending doing the lifting

About the author:

Author name:

By Scott Murdoch

Job title:

Senior Analyst

Date posted:

05 May 2023, 7:00 AM

Sectors Covered:

Diversified Financials, Professional Services

• CCP reaffirmed FY23 guidance metrics. FY23 NPATA guidance is A$90-97m.
• AUS debt buying volumes remain subdued, with cost management in focus to preserve margins. In the USA, both operational and industry conditions have improved incrementally. Volumes are improving; price adjustment will be key.
• Consumer Lending is on track to deliver the expected 2H23 earnings skew and drive the majority of FY24 growth.
• The building blocks are in place for CCP to return to delivering growth from FY24: profitability uplift from the increased loan book (in place); scale and improved operational effectiveness in the USA (execution required); partially offset by a rebasing of AUS earnings (ongoing as subdued volumes persist).
• Improved operational performance and sector conditions are required in the USA to increase conviction in the outlook, with 1Q23 showing enough incremental evidence this can occur. Trading on ~11x FY24F PE, we maintain an Add rating.

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