Chris Judd’s Talk Ya Book: ‘Steady flow of purchase debt portfolios’ makes Pioneer Credit quite interesting

On Chris Judd’s Talk Ya Book today, we hear from Adam Saunders from NGE Capital about debt recovery specialist Pioneer Credit Limited (ASX:PNC) – and why a “steady flow of purchase debt portfolios” makes them very interesting to him.

Several acquisitions (by rival Credit Corp Group Ltd (ASX:CCP)), increased regulatory scrutiny, and some competitors simply going bust through COVID-19 has set Pioneer up as one of only a few key players in the debt recovery market, which is a big boost in Mr Saunders’ eyes.

He said he particularly likes Pioneer’s estimates around its FY24 market size – 325 million – and it’s growth projections, which edge even closer to 400 million.

“They’re now forecasting an NPAT (net profit) of $900 million plus this year and that seems conservative to us considering the interest savings from the debt finance that we already talked about,” NGE Capital’s executive director said.

“They’re not factoring [in] much profit from operating… but given they’re currently buying PDPs at much better IRS than historically has been the case and they’re very good visibility on not only what’s coming down the pipeline in terms of purchases, but also how the books performing, we suspect there’s upside.”

A returning vendor, “one of the big banks,” should also help everything along too. “That should drive a lot of that growth,” Mr Saunders explained.

He added Pioneer seems “aggressive” on strong FY25 and FY26 numbers too.

Pioneer Credit has been trading at 62.5cps.

Talk Ya Book was created by AFL football great Chris Judd in 2019 as a show where fund managers could share their highest conviction investment idea but more importantly showcase their investment framework to the public.

In 2023, Chris joined the people he interviews in the world of funds management by creating the Cerutty Macro Fund. Chris is the founder and portfolio manager of the fund which looks to invest in long term, secular, macro trends.

Disclaimer: Juddcorp Pty Ltd ACN 635 629 631 is a corporate authorised representative (CAR) (CAR Number 1300536) of Boutique Capital Pty Ltd ACN 621 697 621 AFSL 508011.

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