While Credit Corp proves resilient, other players in the listed sector have been sullied by operational and strategic missteps and – ironically – debt problems. 

In the case of Collection House (CLH), shares in the Brisbane-based stalwart have been suspended since February 14 as the company finalises a “comprehensive change program” including a recapitalisation. 

The company has also pledged to reduce the use of litigation as a recovery tool; and better analyse the “vulnerability triggers” that lead to such legal stoushes. 

In the first (December) half results released in June, four months late, Collection House wrote down the value of its PDLs by $90 million to $337m and reported a $67m loss.  

However the company managed an underlying profit of $15.6m – similar to Credit Corp’s full year number. 

Shares in the Perth-based Pioneer Credit (PNC) have been cocooned in market suspension since early June, after private equiteer Carlyle Group walked away from a proposed takeover in acrimonious circumstances. 

That one’s headed for the courts 

Pioneer in late June said it had made “pleasing progress” on debt refinancing negotiations. As with Credit Corp, the company saw debtor repayments reduce in March and April, before rebounding in May and June. 

Pioneer has also been playing nice by refusing to default list or launch legal proceedings against any customer, with management resolving “to continue this customer treatment for the foreseeable future.” 

Arguably Collection House is a recovery play if they can get their balance sheet in order. We’ll leave the complicated Pioneer Credit to those within the Perth bubble. 

The safest bet remains Credit Corp, given its history of performing through the economic cycles. 

Credit Corp shares touched a Covid era low of $6.25, having traded above $37 before the late February market meltdown. 

Now trading just below $20 apiece, Credit Corp shares are above their levels of mid June 2018, when short seller Checkmate Research issued a scathing report which claimed, among other things, that Wallet Wizard was a de facto payday lending operation. 

Credit Corp denied the accusation and - unlike so many other short attack targets – has emerged unscathed. 

Credit Corp shares are well traded and volatile, regularly featuring the in the ASX’s daily list of the top 200 rising – or declining – stocks. 

Credit Intelligence (CI1) 

Hang on!  There’s another smaller, ASX listed debt collection play that turns a profit. 

The difference with the $34 million market cap Credit Intelligence is that it’s based in Hong Kong and its business is oriented to the former British colony, which might have avoided the worst of Covid-19 but is blighted by political strife. 

The civil unrest has been conducive to business failures and this will only get worse. 

Sagely, Credit Intelligence has sought to expand beyond Honkers, having bought two Singaporean businesses and the Sydney based Chapter Two. 

Credit Intelligence reported a $1.25 million profit in the December half on revenue of $6.07m and even paid a div of half a cent. 

Management forecasts a 420 per cent rise in 2019-20 net profit, to $2.6m. 

Tim Boreham edits The New Criterion ([email protected])

Disclaimer: Under no circumstances have there been any inducements or like made by the company mentioned to either IIR or the author. The views here are independent and have no nexus to IIR’s core research offering. The views here are not recommendations and should not be considered as general advice in terms of stock recommendations in the ordinary sense.