Morningstar | Senate Inquiry Increases Credit Corp’s Regulatory Risks But Not Enough to Change its FVE
We believe Credit Corp is well positioned to increase earnings from its new growth segments of acquiring U.S. purchased debt ledgers, or PDLs, and issuing consumer loans to Australians with an impaired credit history. These businesses should compensate for forecast lower growth in its core Australian PDL segment. The company earned its first profit in the U.S. PDL business in fiscal 2018, and it continues to gain scale in its personal loan business. These businesses are poised for growth, but the extent of this growth will be tempered by the company's currently high levels of debt and potential new regulations impacting its consumer finance business. In the near term, we expect the company will focus more in reducing debt than it has in the recent past, which will likely limit the volumes of PDLs acquired and loans issued.Credit Corp Group is engaged in debt purchase and collection as well as consumer lending. Co.'s segments are comprised of: debt ledger purchasing, which is comprised of purchases of consumer debts at a discount to their face value from credit providers with the objective of recovering amounts in excess of the purchase price over the collection life cycle of the receivables; and Consumer lending, which provides various financial products to credit-impaired consumers.
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