Why did the Credit Corp share price just fall off a cliff?

MotleyFool2023-10-18

The Credit Corp Group Limited (ASX: CCP) share price fell 32% to a new 52-week low of $11.655 as the market reacted to surprising news on Wednesday. Here are the details. Credit Corp share price ...

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This morning, Credit Corp announced that it anticipates a more than 50% reduction in its FY24 profits.This is due to an impairment of the carrying value of its US Purchased Debt Ledger  assets.The company said the impairment will represent approximately 14% of the carrying value. It will likely show up in Credit Corp's interim financial statements for the period ending 31 December 2023.The company estimates that the impairment will result in a one-off but substantial reduction in net profit after tax  for FY24. As a result, the company has reduced its FY24 guidance.Earnings per share  will be substantially lower, with guidance reduced from 132 cents to 147 cents to a range of 51 cents to 66 cents.The Credit Corp share price has fallen 30% over the past year and is down 35% in the year to date.","collect":0,"end_time":0,"defaultTopTitle":"fool.com.au","property":[],"viewcount":null,"language":"en","relate_stocks":{"PDL.AU":"Pendal","CCP.AU":"CREDIT CORP GROUP LTD","BK7093":"消费信贷","BK7062":"资产管理与托管银行"},"translate_title":"为什么信贷公司的股价一落千丈？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"CCP.AU":1,"PDL.AU":1},"content_text":"The Credit Corp Group Limited (ASX: CCP) share price fell 32% to a new 52-week low of $11.655 as the market reacted to surprising news on Wednesday. \nHere are the details. \nCredit Corp share price plummets to new 52-week low \nThis morning, Credit Corp announced that it anticipates a more than 50% reduction in its FY24 profits. \nThis is due to an impairment of the carrying value of its US Purchased Debt Ledger (PDL) assets. \nThe company said the impairment will represent approximately 14% of the carrying value. It will likely show up in Credit Corp's interim financial statements for the period ending 31 December 2023. \nThe company estimates that the impairment will result in a one-off but substantial reduction in net profit after tax (NPAT) for FY24. As a result, the company has reduced its FY24 guidance. \nPreviously, the FY24 guidance issued in August was for statutory NPAT to fall within a range of $90 million to $100 million. This has been downgraded to a range of $35 million to $45 million.\nEarnings per share (EPS) will be substantially lower, with guidance reduced from 132 cents to 147 cents to a range of 51 cents to 66 cents.\nWhy did this happen?\nIn a statement, Credit Corp told shareholders: \n\nThe impairment has arisen from a sustained deterioration in collection conditions. In releasing its FY2023 results on 1 August 2023 Credit Corp advised of increased US repayment plan delinquency over the final quarter. \nThese conditions have persisted throughout the first quarter of FY2024, prompting a reassessment of the medium-term outlook for collections on the Company's US PDL assets. \nThe purchasing cohorts most affected comprise of assets acquired in FY2022 and FY2023.\n\nWhat now? \nThomas Beregi, CEO of Credit Corp, said that reduced market pricing should support the viability of continued purchasing. \nBeregi said: \n\nPrices at which the FY2024 US investment pipeline has been secured should deliver Credit Corp's target return in present conditions.\n\nCredit Corp will provide a performance update at the annual general meeting next Tuesday, 24 October.\nCredit Corp share price snapshot \nThe Credit Corp share price has fallen 30% over the past year and is down 35% in the year to date.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2376245211"}