Pioneer Credit Limited (ASX:PNC)
Recommendation: BUY
Price: $3.50(¥330)
Target (12 months): $4.35(¥440)
Capital Growth: 24.3%
Dividend Yield: 4.1%
Total Expected Return: 28.4%


Significant increases in all key measures –

• Cash receipts of $105.30(¥11,550)m up 50.25%
• Statutory Net Profit after Taxation of $17.60(¥1,870)m up 63.68%
• EBITDA of $54.34(¥5,940)m up 55.06%
• EBIT of $28.82(¥3,080)m up 65.25%


Pioneer Posts Record Results and a Strong FY19 Outlook

Pioneer Credit Limited (ASX:PNC) is an Australian financial services provider, specialising in the acquisition and servicing of unsecured retail debt portfolios, with a preference for credit card and personal loans. The company employs a differentiated customer-centric service model whereby it engages with its 160,000+ customers to provide tailored flexible repayment options to maximise liquidations over the long-term and foster constructive customer relationships. In doing so PNC aims to offer a range of financial products to performing customers who have demonstrated a capacity to service debts. PNC currently services purchased debt portfolios (PDPs) from Australia’s tier 1 financial institutions, including each of Australia’s ‘Big 4’ banks representing ~ $1.2 billion(¥132,000,000,000) in face value.
Pioneer announced its full-year results for the period ended June 2018. For the first time, annual Purchased Debt Portfolio (PDP) liquidations exceeded $100(¥11,000)m, growing by 43.90% to $101.67(¥11,110)m. This growth is testament to the company’s continued ability to invest in PDP forward flow programmes and larger one-off opportunities, on preferred terms. An effective and appropriate servicing strategy ensures that their cash generation outperforms, in a manner that is beneficial for all stockbrokers, including Pioneer’s newly acquired customers. Off the back of the record liquidations result, net revenue grew by 44.74% to $81.50(¥8,910)m. Net profit after taxation grew by 63.68% to $17.60(¥1,870)m and reflected their continued substantial investment in positioning for future growth opportunities.


Continuing to Invest in Different Service Offerings

Pioneer has rich interactions with its customers, and a valuable data set from which to make informed decisions – on what portfolios they will invest in, to whom they provide personal loans, and increasingly on when and how to best engage with their customers. These aspects of the business are well ingrained, with an opportunity to improve. Delivering a service that is valued, in a manner that is respectful and considerate, while recognising the evolving digital communication preferences of its customers is important to its success. Pioneer has typically been a later adopter of technology and this has served them well. They have recognised the need to continue to adapt and the company has announced an initial investment of $500,000(¥55,000,000) in Australian fintech, “Indebted”. Indebted is a technology business that provides data driven, receivables solutions, and leverages machine learning and digital first communication to drive enhanced liquidation performance. The platform also uses real time payment technology and has a dynamic and system driven compliance engine enforcing regulation in real time, which continues to support Pioneer’s offering.


Purchased Debt Portfolio Investment and Changing Market Dynamics

A continuing characteristic of the PDP market is the development of the competitive environment, the commentary on increasing volumes of accounts due to changes in accounting standards and the upwards price pressure that is being experienced. Based on results released to the ASX, changes to expected loss provisions among the big four banks have not exceeded 0.13%, an immaterial number and not one expected to result in an increase in account volumes coming to market. Of greater significance to the market is price. Pioneer has never experienced any material price pressure. In FY18 they made their largest PDP investment ever, circa $84(¥9,240)m, across the same types of accounts they have historically invested in, and at a price point that was (slightly) less than the prior period. Pioneer has been and continues to be well positioned to take full advantage of the market dynamics, and their differentiation is valued and rewarded by major institutions – in the current banking environment this is expected to continue.



Pioneer have declared a fully franked final dividend of 7.71 cents per share which will be payable on 26 October 2018. The record date for the dividend is 28 September 2018 and the company will continue its dividend reinvestment plan which will again be offered at a 2.5% discount to the 10-day volume weighted average price following the record date.


Outlook and Guidance

Pioneer expects to continue growth in the new financial year and they are increasingly seeing larger portfolio and acquisition opportunities worthy of their time. A patient and disciplined company, Pioneer are looking forward to keeping the market informed of their progress and delivering on:


• A personal loan book targeted at $30(¥3,300)m by the end of calendar year 2018
• FY19 PDP investment of at least $80(¥8,800)m
• FY19 PDP liquidations of at least $120(¥13,200)m
• FY EBITDA of at least $65(¥7,150)m
• FY net profit after tax of at least $20(¥2,200)m


All the information supplied in this document is for research only and has been sourced from Pioneer Credit Limited media release and Bell Potter research. If you have any questions regarding the information supplied in this document, please contact Paul or Adrian at Capri Financial Services on 07 5527 6060, or email at

Categories: Investing