The share price of Credit Corp Group Ltd [ASX:CCP] has continued its upward trajectory today with the announcement of its first half results for FY21.
At the time of writing the CCP share price has climbed 7.91% or $2.33 to trade at $31.79 per share.
The debt purchase and collector has made steady progress to recover its losses suffered during the market crash in March.
But how will CCP fair in the second half of the year as the amounts of bad debts dwindle and Aussies get back to work.
The answer could surprise you
The standout result in CCP’s financial results is a reported 10% increase in net profit after tax, which grew from $38.6 million in H1 2020 to $42.3 million in H1 2021.
CCP said all segments either met or exceeded expectations, with Australian and NZ debt buying and consumer lending businesses achieving expectations while the US outperformed.
Indeed, it appears it was the company’s US segment that was the star performer this half.
With revenue from Aus/NZ debt buying increasing by 7%, the US debt buying segment increase revenue by 100% to $8 million.
Source: Credit Corp Group
As you can see in the graph above, the company’s recent purchase of the Collection House contributed significantly to CCP’s volume for the first half.
CEO Thomas Beregi said that while all credit issuers selling prior to COVID-19 had resumed their sale programs purchasing volumes were only now starting to grow as the impact of issuer forbearance dissipated.
‘The Collection House purchase will enable us to maintain our operational scale and grow collections while ongoing purchasing volumes recover.’
But it could be the US where CCP realises its biggest gains in the second half.
Operational improvement and elevated purchasing over recent years in the US combined to deliver a 36% increase in US collections and a doubling in segment profit.
Although purchasing volumes contracted over H1 as a consequence of diminished supply and the impact of monetary stimulus on competitor purchasing appetite and pricing, Mr Beregi said the strong US profit contribution showed that the business was realising its potential.
Outlook for the CCP share price in 2021
While things are looking up as Australia makes its way out of the COVID-ravaged landscape, there is a lot of cleaning up to do since the storm.
Meaning CCP’s outlook is quite good.
The company has again updated its profit guidance for the year to $85–$90 million.
That’s a decent increase from the $70–$85 million they had in December 2020.
Disappointingly, despite the increase in profit and improved outlook, CCP will not be boosting its interim dividend.
That will remain at 36 cents per share.
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