Ann: Collection House Limited (CLH) Market Update-CLH.AX, page-16

@Madtrader I have been madly trying to find the time to sit down and spend an entire afternoon completing my valuation on CLH - so that I can actually add some value to the many in depth posts which you have written... But I just haven't found the time... I have a valuation (rough one) on my personal computer... actaully found it in a previous post refer below post from a while ago, fair value of $1.40...

So had a look over the half year. EBITDA margin decreased to 26.5% (from 33.4%), PDL revenue was strong though so overall they increased revenue by 1% to $64.5M. I am expecting another 20% fall in PDL in 2H16 - however it is important to note that 50% of PDL recoveries are of debt >2yrs old, and 36% of debt recoveries from debt >3yrs old... So a fall of 20% in PDL really equates to a decline of 10% on PDL revenue...
The guidance given of $15.5M - $19.3M, I expect will come in on the lower range - IMO around $16M. With margins being squeezed in the short term I expect EPS to be 12.2c and DPS to be 6.5c, so final of 2.6c... I have an order in @ $1.10 - hopefully this will execute based on negative sentiment.
If not with earnings stabilizing and dividends increasing from 2017 onward, I think fair value right now is ~$1.40.

I agree completely with the majority of your comments, but I do not believe you are taking into account two things 1) competitors have been overpaying for debt so their returns are going to suffer exactly as you have pointed out 2) Although the margins on debt purchase has reduced (drastically) this has been identified and CLH are in the midst of rectifying this - which the optimist in me see's that PDL margins will again increase. The amortization part of your post I do not 100% understand - not your post, my fundamental understanding of amortization... 3) CLH are (already have) positioned themselves as a company that does the right thing... "by the considerations beyond prices paid, such as market sustainability and compliance"... This is an important statement, read in to it what you will but that is a very confident statement about what the companies selling debt to CLH think - you pay more for quality...

Sorry that there isn't too much technical detail in the above. I have bought and I am happy to hold and see continuing dividends, by 2017/18 we will be pushing back north of $2 as goverment revenue continues to increase. Also 1 other thing I believe CLH has significant growth potential. This was factored into the SP while we were at $2 (when some people got burnt), and now based on a couple of okay (not bad) results this have been completely stripped from the SP - it will take time but confidence will be gained again and the CLH will again be overvalued based on this growth potential... But this may not happen for a year or two...