Join our investing community

Credit Corp - ASX:CCP

Discussion in 'Shares' started by Allison, 11th Feb, 2008.

  1. Allison

    Allison Member

    Joined:
    9th Sep, 2007
    Posts:
    7
    Location:
    Sydney
    So... any opinions on what CCP has just done?

    From earlier company guidance of $24m NPAT, then to the CEO selling his shares, then a downgrade to $17m NPAT, now another downgrade to $10m NPAT. That's if you missed the fine print and didn't notice that the $10m doesn't include $5m in restructuring costs. So really $5m NPAT.

    Sure there are variables and risks in any business, but at what point does dumping your own shares prior to two huge downgrades constitute a breach of disclosure to shareholders.

    I know of at least two fund managers that won't be happy with today's announcement for more than one reason.
     
  2. The Stig

    The Stig Well-Known Member

    Joined:
    3rd Dec, 2007
    Posts:
    190
    Location:
    Central Coast NSW
    Clime will either be very unhappy or very happy and buy a whole heap more.

    Not a bad drop. 75% in 1 day.

    I am thinking of buying some now LOL.

    Glad I held off from buying some last week.

    Seriously. I was looking at putting money into Clime. They had an article in the prospectus they sent me. They like to buy shares below their intrinsic value. But they also say they like to buy companies that have little or no debt. I see CCP has 125million in debt. Not sure what to make of that.

    Regardless, Roger Montgomery, was saying in a seminar I went to that if you had a company paying 25% return on your equity would you be worried if the stock dropped 90%? I put my hand up and said yes because the company might be in trouble, and a 90% drop isn't so good. He said it shouldn't worry you so long as they still pay the same dividend.

    Anyway, am I correct in thinking the only thing CCP did wrong was grow too fast? More homework I guess.

    Cheers
    The Stig
     
  3. Allison

    Allison Member

    Joined:
    9th Sep, 2007
    Posts:
    7
    Location:
    Sydney
    I totally agree with you Stig.

    The market isn't so stupid to price a company 90% lower for no good reason. To say that it's ok to lose 90% as long as the return on equity is 25% and the dividend is upheld is ludicrous. Firstly, as you rightly mentioned, there is usually a reason for a 90% drop. Secondly, the reason for the 90% drop probably means the return isn't 25% anymore. Thirdly, not only is it a ridiculous assumption to expect said company to maintain its dividend, but what's that got to do with getting back your 90% loss? Unless of course the dividend was so big that it made up for your loss.

    Sure if the dividend was 2% of the price, it might now be 20%, but there's a reason for this. Why not buy Centro right now? I hear it has a huge dividend (if you forget about its present state).

    So many of these systems and theories look to the past and not the present (or future). If the future says the company is going under, the past means almost nothing. Who cares about a 25% return or a 2% dividend if they are old news. Given a 90% drop, I'd say they are almost definitely old news.

    I think the current market is going to undo systems like this. The return you get on most investments has to do with what happens in the future. The past may give a hint about the reliability of your estimates, but all of this nonsense about ignoring the present/future seems ridiculous (to me at least).

    CCP is below $0.93 now. :eek:


    EDIT: Just reading my post again, it sounds very cynical. I didn't mean it to be, I've just heard so many systems based on such ridiculous assumptions. I think you were totally right to question that claim about the 90% drop.
     
  4. DaveJ

    DaveJ Well-Known Member

    Joined:
    13th Nov, 2005
    Posts:
    123
    Looks Like a Bargain to Me... Not!

    WOW... Something very wrong here.:eek:
     

    Attached Files:

    • CCP.jpg
      CCP.jpg
      File size:
      43 KB
      Views:
      26
  5. Tropo

    Tropo Well-Known Member

    Joined:
    17th Aug, 2005
    Posts:
    3,396
    Location:
    NSW
    Nice drop from $12 to $0.91.:p
    Yeh....View to a kill.:D
     
  6. tropic

    tropic Well-Known Member

    Joined:
    13th Sep, 2006
    Posts:
    131
    Location:
    WA
    Hmmm, looks similar to my Centro shares:mad:.
    I wouldn't touch it right now.
    Has to be something seriously very wrong with the company.

    Similar argument with Centro, they still have tenants that are paying rents and has very low vacancy rates. Still have good income stream.
    What else that the company has not disclose?
     
  7. The Stig

    The Stig Well-Known Member

    Joined:
    3rd Dec, 2007
    Posts:
    190
    Location:
    Central Coast NSW
    I think both companies would be a good buy sometime this year.

    But only if the companies grow and increase their earnings and dividends after they get mess sorted out. (derrr)

    If you bought them both, one of them is bound to make well over 100% over the next 7 years I think.

    I will be buying them after I do more homework and satisfy myself that the worst is over or it can't get much worse for them. If that makes sense LOL.
     
  8. islandgirl

    islandgirl Well-Known Member

    Joined:
    18th Sep, 2006
    Posts:
    118
    Location:
    Middle of beautiful Moreton Bay, Qld
    I was actually listening to a podcast that I downloaded yesterday from the ASX podcasts from Roger Montgomery of the Clime group. What he was saying made a lot of sense. I would be interested to hear other (more informed) opinions. He does actually mention Credit Corp but I think this was done in December
     
  9. The Stig

    The Stig Well-Known Member

    Joined:
    3rd Dec, 2007
    Posts:
    190
    Location:
    Central Coast NSW
    Credit Corp is still going lower.

    I wonder if they will survive.

    CREDIT CORP GROUP
    Interesting reading from the Brokers Recommendations.
     
  10. DaveJ

    DaveJ Well-Known Member

    Joined:
    13th Nov, 2005
    Posts:
    123
    Probably not... At least in the current form


    Might be time to google "Technical analysis + Downtrend" :rolleyes:
     
  11. Tropo

    Tropo Well-Known Member

    Joined:
    17th Aug, 2005
    Posts:
    3,396
    Location:
    NSW
    One more...'View to a Kill' :D
     

    Attached Files:

  12. The Stig

    The Stig Well-Known Member

    Joined:
    3rd Dec, 2007
    Posts:
    190
    Location:
    Central Coast NSW
    I was talking fundamentally Dave
     
  13. Rob G.

    Rob G. Well-Known Member

    Joined:
    6th Jun, 2007
    Posts:
    717
    Location:
    Melbourne, VIC
    Issues with buying/holding based on yields:

    1) Has the underlying business failed, making future distributions unsustainable. In fact the company might even be dipping into capital to pay a dividend to keep the shareholders happy (until they find out they are paying tax on their own money).

    2) If the business is sound but financing overloaded by debt, then you risk the company issuing more equity at its current cheap market price which dilutes your holding which you purchased at a higher price. Or it might cease distributions to replace debt with retained earnings - fine if it provides a good return within the company, but this should be reflected in an increasing price.

    3) Alternatively, if the business is really under-priced then another company might take it over and redeem your shares at the paltry market price. Even worse, it may be one of those leveraged buyouts substituting their worthless scrip.

    To jump or stay put requires a lot of thought.

    Cheers,

    Rob
     
  14. DaveJ

    DaveJ Well-Known Member

    Joined:
    13th Nov, 2005
    Posts:
    123
    But my question is we don't actually know the fundamentals of the stock... And with that much money leaving the stock (ie the selling and lower of share price) there has to be something wrong?

    I would just tread very carefully and research research. There are much easier shares with less uncertainty to invest in at the moment... Have you seen LGL lately?:cool:
     
  15. The Stig

    The Stig Well-Known Member

    Joined:
    3rd Dec, 2007
    Posts:
    190
    Location:
    Central Coast NSW
    Well, this would be one of those technical analysis moments where I would be waiting for a bottom to form and then an uptrend to start before I "seriously" thought about buying it. It's off my radar for the moment. Agreed, many other things to look at with less risk involved.

    The talking heads on CNBC are saying Gold is going to go to $1600. I have never heard a prediction that high before for gold. That would help LGL if it makes it there.

    Tropo, why delete your chart?
     
  16. Tropo

    Tropo Well-Known Member

    Joined:
    17th Aug, 2005
    Posts:
    3,396
    Location:
    NSW
    "Tropo, why delete your chart?"


    It was LGL chart. But it is so obvious that I decided not to post it.
    If you are considering LGL - I would wait for a break up on the big volume.:p
    Anyway...check LGL chart.
     
  17. creditcorptrouble

    creditcorptrouble New Member

    Joined:
    8th Sep, 2009
    Posts:
    3
    Location:
    Melbourne
    Credit Corp

    Even worse, are they in a spot of bother in respect of licensing:

    Credit Corp Trouble
     
  18. creditcorptrouble

    creditcorptrouble New Member

    Joined:
    8th Sep, 2009
    Posts:
    3
    Location:
    Melbourne
    Credit Corp / ASX:CCP

    And it would seem some privacy issues, now that the Privacy Commissioner has concluded that the company has accessed a credit file using false information. One has to wonder about the probity of the corporate compliance systems in place behind the scenes. No wonder the Clime action continues to chug along. Will there be more in the future?

    The Privacy Commissioner's findings can be found at:

    Credit Corp Trouble
     
  19. creditcorptrouble

    creditcorptrouble New Member

    Joined:
    8th Sep, 2009
    Posts:
    3
    Location:
    Melbourne
    Dropping like anything

    Share price down 10% in a week at the end of June. Graph at Credit Corp Trouble.

    Glad I offloaded almost all of my CCP shares when they were around the $3 mark. The volume so far today is a massive 304 shares lol