Update shared on 05 Feb 2026
Fair value Decreased 0.63%A small weight was added to my portfolio.
Australian/New Zealand Debt Buying-Stabilisation Story
Hasn't quite seen the stabilisation yet, with NPAT down 10% from H1 2025. The segment did suffer from disruptions. However, much of this has been remediated, and the business has successfully acquired several one-off purchases in January. Which includes a large run-off credit card book. In conjunction with CCP's target investment towards faster-liquidating, lower-balance credit card products
This has boosted AU/NZ investment volumes from $80-$100 million to $120-$150 million. This may enable the AU/NZ Debt Buying segment to find that stabilisation by year-end.
US debt buying-Turnaround Story
The segment saw a 25% increase in revenue and a 63% increase in NPAT. This would be the result of 41% increase in productivity compared to H1 2025. The business is looking to further improve operations.
However, the full-year investment pipeline has been reduced from the projected $200-230 million to $160-180 million. This will impact the company's collection volumes for the segment and may see AU/NZ and the US debt-buying segments offset in the second half of the year, with volumes increasing for the former and decreasing for the latter.
Consumer Lending-Growth Engine
We considered this the growth engine in our earlier report. It is a vital segment, accounting for almost 60% of the group's NPAT. With the bulk of that coming from the wallet wizard business. Refreshed marketing and improved operational execution have produced record half-year loan volumes. New customer volume grew by 25 per cent over the same period in the prior year. While RBA statistics indicate a modest recovery in unsecured credit demand, more granular credit bureau data suggest that demand in the credit-impaired segment has remained flat. Accordingly, Credit Corp’s market-leading Wallet Wizard product has increased its share of the credit-impaired market segment.
The NPAT for the business as a whole, and particularly the lending segment, incurs several upfront costs, such as marketing costs and loss provisioning. These appear to have impacted Wallet Wizard with revenue up 12% and NPAT down 3% compared to H1 2025.
Hopefully, this subsides, and the additional investment translates to interest income and growth in H2 and beyond. The Humm opportunity is still in the pipeline, and several smaller lending businesses have deteriorated.
Concluson
The company's overall results were dragged down by weaker results in its AU/NZ segments. This business segment faced headwinds over the first half of the year. This may translate into higher revenue and margins by the end of the year, with volume increases, upfront costs accounted for, and disruptions remediated. As mentioned at the end of 2025, a 2 percentage-point decrease in interest rates will reduce NPAT by $5.5 million. We have just had one, with the possibility of two more by year's end, with the ASX 30 Day Interbank Cash Rate Futures Implied Yield Curve showing a Dec 26 implied rate of 4.25%.
Conservatively, over 60% of the business is in Australia. Three (we have had one) 0.25% hikes could translate to a $1- $2 million decrease in NPAT.
Our cautious valuation late last year, based on Earnings, placed the intrinsic value at $12.60-70 per share. Management has reiterated the previous guidance (NPAT: $100-110 million; EPS: 147-162 cents). The H1 NPAT margins was 15.5%. Noting the business typically has a stronger second half, with heavy first‑half marketing spend and headwinds expected to translate into improved earnings in H2 2026.
Our previous valuation had NPAT coming in at $97.4 million by the end of FY26, which is below the management's guidance at the start of the year. We have gone a fraction more conservative with the valuation by reducing revenue growth to 6% from 7%. As mentioned, the upfront cost can yield better margins with higher investment volumes reaping rewards at the backend and beyond.
Unfortuantely I missed the opportunity to buy near $11 per share yesterday (5/2/2026). Finding a decent margin of safety in a slower, more mature business is vital, and we will look to hopefully purchase some if $11 is tested again.
I have initiated a small purchase at around the $11.50 price today. I missed another dip towards $11. 😒
Have other thoughts on Credit Corp Group?
Create your own narrative on this stock, and estimate its Fair Value using our Valuator tool.
Create NarrativeDisclaimer
The user FundamentallySarcastic has a position in ASX:CCP. Simply Wall St has no position in any of the companies mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.