Briefly examined their profile and financial statements, Pioneer Credit appears to be all about writing loans to the 'dog-shit' end of the credit market. Or in more polite terms, consolidating debts on behalf of individuals who are already having credit difficulties (90+ days in arrears). That and acting as a product broker for banks. I don't want to rain on your parade, but I don't see what competitive advantages this company have their competition in the same market-space. Their current market cap for PNC is ~109 million AUD. They've had some years with impressive growth in revenue and profit (20% plus per annum). I didn't have to look far to find how they achieved it. http://corporate.pioneercredit.com.au/wp-content/uploads/2016/08/PNC-120.pdf So, 10-1 leverage to write loans for customers who were already defaulting on their previous commitments. Gotcha. Also can't help but notice how they're raising capital by issuing more equity, whose price is buoyed by optimism about future growth. I think we've all heard this tune before, haven't we?
Thanks for the reply RCS. I put this up prematurely to see if people were keeping an eye on it too before looking into it in depth. They have performed well and have holdings in other companies of interest which caught my eye. However went reading more into them here is also a lot of scepticism on the way PDL /Change in value is calculated by other people who have been looking closely at PNC. The same thought can be said about CCP but less aggressive on their accounts.
Roswell you actually misunderstood how these type of companies operate. Firstly when they buy defaulted debt from banks, etc they are not writing a loan. They are merely purchasing the defaulted loan from the bank. Secondly it is not 10-1 leverage. They buy the defaulted debt at a large discount to face value. For example if you default on a Credit card with $10,000 debt on it and you do not pay for 6 months then the bank sells that debt to Pioneer Credit for $1500 (for example). Then Pioneer Credit tries (not always successfully though) to get $10,000 out of you. The "face value" of the debt is $10,000 and the purchase price is $1500. That $1 billion dollars quoted by the company is the face value of the debts the purchased. They actually paid a small fraction of $1 billion dollars to purchase those debts. Credit Corp (CCP) is the best large debt collection company in Australia. Compared to Pioneer Credit (PNC) and also Collection House (CLH) It has better management, a better track record, a higher return on equity, a stronger balance sheet, a more diversified business, etc Disclosure: I own shares in Credit Corp Group (CCP)
