With emerging needs, leading Australian receivables management companies that provide solutions in credit management, collections and customer care are being up on the radar. Given the scenario, two stocks in the domain that investors generally like have been discussed herein below:
 

Collection House Limited

CLH’s subsidiary ThinkMe Finance Pty Ltd obtains a full Australian Credit Licence: Collection House Limited’s (ASX: CLH) stock has risen 23.02% in three months as on May 25, 2018 and has a good dividend yield of 5%. While the group’s half year result had some shortcomings in terms of revenue, but it has reached its FY18 PDL purchasing target of $60 - $65 m with an eye on price discipline and has increased its FY18 guidance as well. With improving outlook, dividend will be maintained at 3.9 cents per share with FY18 EPS guidance upgraded to 14.5 – 15 cents per share. The company’s wholly owned subsidiary, ThinkMe Finance Pty Ltd has very recently obtained from ASIC a full Australian Credit Licence, which will enable it to provide consumer loans. This is a part of the planned growth, which started with broker related loan processing over two years ago. Moreover, CLH has completed a transaction under its partnership with US private equity fund manager Balbec Capital LP and its local related entity, InSolve Capital Australia Pty Ltd. The company has assigned five years’ cash flow from a $39.5m segment of the Collection House Arrangement book to InSolve through a put and call option agreement. The consideration is in the form of unencumbered cash of $19.5m, that CLH has planned to reinvest in further debt purchases this calendar year. Additionally, CLH has upgraded the FY 18 EPS forecasts and expect it to be between 18.0 – 18.5 cps for the financial year ending June 2018 (up from 14.5 – 15.0 cps). Meanwhile, CLH stock is trading at a P/E of 12.11x. Further, Cash Converters International Limited (ASX: CCV) under an agreement with the Australian Securities and Investment Commission (ASIC) for historical issues relating to collections contact frequency and default listings, has engaged CLH to ensure compliance by transitioning its collections activity to the company. As of now, we give a “Speculative Buy” recommendation on the stock at the current price of $ 1.57 (up 1.29% on May 28, 2018).
 

Credit Corp Group Limited

FY18 Guidance confirmed: Credit Corp Group Limited’s (ASX: CCP) stock rose 1.89% on May 28, 2018. The company has confirmed the FY 18 guidance, and expects FY 18 earnings per share to be in the range of 130-134 cents. This represents the profit growth in the range of 12% to 16%. Further, the increased Purchased Debt Ledger (PDL) purchasing pipeline of $190 million has necessitated a revision of the 2018 PDL investment guidance. CCP has grown its 2018 contracted debt ledger pipeline from $75 million at the start of the year to $190 million due to large spot purchases and the rollover of existing forward flow contracts. The company’s Australia/New Zealand lending business is on track for 30% earnings growth in 2018. The US debt buying operation is profitable, and is expected to achieve a full year turnaround of up to $3 million. Moreover, the company has secured New site in Salt Lake City near present site and the move will occur during June. Meanwhile, CCP stock has fallen 9.43% in three months as on May 25, 2018  and is trading at a P/E of 15.08x. As of now, we give an “Expensive” recommendation on the stock at the current price of $ 19.37.
 

FY18 Guidance confirmed (Source: Company Reports)

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