Directors have been buying regularly. Surely they knew of the FSA enquiry beofre the market, yet they must feel it is a minor issue.
Huge show of confidence by the Directors.
I trust their judgement more than all the speculating brokers.
Their business plan may have imperfections, but whose is perfect.
Sentiment has wiped £200m off this company.
WAY OVERDONE. TIME TO MOVE IN, NOW THAT THE PRICE HAS BOTTOMED OUT. |
£200m wiped off the value of the company !
Might just be an over reaction. |
Buyers appear to be moving in. |
Nice opportunity.
I have just opened a long.
Looks to be a small part of the business.
The Chairman (and his partner) have a significant share holding here so i'm sure that it will be sorted out.
Also a 'Naked Trader ' long with a previous buy at £2.99 - target £400.
Could possibly drop a tad lower, but i'm certain that it will bounce very strongly over the coming week. |
Thanks for that post simon. It confirms my thoughts and worries about CPP. This is just the tip of the iceberg for CPP's troubles imho. |
 Alphaville - 29/3/11:
CPP's identity crisis Part II
The downgrades are starting to rain down on CPP, the credit card and identity theft insurer that's attracted some unwanted regulatory heat.
Joint broker JPMorgan has cut its forecasts and is worried the FSA probe revealed late on Monday could land CPP with a large fine, while the company's other adviser, UBS, has put its rating under review. Elsewhere, Citigroup has removed its buy rating on CPP and Canaccord Genuity is simply advising clients to sell.
The backstory here is that CPP, which boasts 1m ID protection policies in the UK, is under investigation by the FSA for what it describes as "failings in sales calls with customers".
In other words, the UK financial watchdog is alleging miss-selling: CPP's customers think the insurance product they purchased covers theft from their bank accounts whereas it just covers the administration costs of dealing with theft.
Cue the downgrades.
JPMorgan:
We were already towards the bottom end of the Bloomberg consensus range but are reducing our FY2011E estimates by c. 3% to PBTA of £51.1m and EPS of 20.5p reflecting the impact of the anticipated accounting changes and reduced ID policy sales in the short-term. We anticipate Bloomberg consensus will reduce by c. 5-8.
In addition, the announcement is clearly a blow to investor sentiment, with increased uncertainty surrounding the group while the FSA carries out its investigation. While there is no anticipated cash impact in the near-term, there remains a risk that the FSA investigation could result in either a refund of the policy premium to the customer or a fine, should the FSA find failings in the way products were sold. However, it is worth noting that the group has been selling UK card protection policies since 1981, over which time it has been governed by the FSA or equivalent body.
UBS:
Key question for us is how the Business Partners react We believe the company is in the midst of informing business partners (BPs) of the decision to stop selling IDP. Historically CPP has been relatively indifferent to which product it sells. However, the overriding bigger picture question is how the BP's will react to it given the products are often sold in their name, and they are unlikely to want negative publicity. We suspect BP's may take some time to reflect on it and as yet there is no clarity on initial reactions from them.
Rating and price target under review Whilst we believe the business model could be shifted to selling non-insurance related products without too many issues, the key uncertainty is BP reactions and this is harder to gauge. We set our rating and price target under review. Our price target has been based on 12x 2011E EV/ EBIT.
Now, you might think the 50 per cent fall in the CPP share price is somewhat overdone. After all the downgrades aren't huge.
Indeed, you might buy the company spin that identity insurance is only a tiny part of the group's revenue and in any case it will have a "non-insurance" identity protection product ready for launch in six weeks.
However, the UK isn't the only market where CPP, which has 10m policyholders in 15 countries across the world, is feeling regulatory heat.
From CPP's half-year results in August (emphasis ours):
In Hong Kong, the Privacy Commissioner for Personal Data is investigating the transfer of personal data to third parties for marketing purposes. This has resulted from apparent issues with the way Octopus has transferred personal data to its partners, including CPP. As a result there is a temporary suspension of all third party marketing in Hong Kong which impacts our telemarketing channel. Sales by our partner banks are unaffected so there will continue to be some sales of our Card Protection product, mainly by Citi, however this issue has a significant impact on new income in Hong Kong. There is currently no indication as to when this temporary suspension will be lifted.
And there still isn't.
All of which should serve as reminder of the legal (and potentially political risks) associated with marketing financial services using nascent products, reckons Canaccord.
We believe the concerns could go much deeper than the particular product, given that it appears to be the channel and not the product per se that has attracted the FSA's attention. This risk (as the Hong Kong example shows) is not confined to the UK.
Quite.
Perhaps that 50 per cent fall is not an overreaction. |
would the chairman have known this was coming as he bought shares last week , to show a vote of confidense ?? |
wasn't the confterence call today at 8am as per the rns? |
noddy, this will get worse in my opinion. I can see the share price crashing towards the £70 level within 4 weeks. CPP can possibly be fined a large sum of money if the FSA discovers any wrong doing. If The FSA dig deep enough, they may find other issues. There may be a class action suit by customers to get their money back on Identity Protection product and so on and so forth. We just don't know yet. Anything is possible. CPP will be trying to downplay the problem of course. |
Way overdone.
This will bounce tmw 20-30% during the conference call when most of the fears will be removed. |
Not the sort of surprise which commends itself to me!
Curiously though, share price has been heading down notwithstanding good results and a bouyant market over the last few days.
It rather looks as if those in the know have been taking their chips off the table. |
Discussions with FSA
CPPGroup Plc ("CPP" or "the Group") announces that it is in discussions with the FSA in relation to certain issues surrounding the sale of the Group's Card Protection and Identity Protection products. The FSA's investigation only relates to such of the Group's products as are sold into the UK, and specifically to alleged failings in sales calls with customers. The Group may need to conduct a review in order to identify whether any deficiency has caused customer detriment requiring redress. |
Tipped in press as a buy |
Broker upgrade |
Looks like you're certainly doing something right Phil!
However, I can only imagine there are very few people in the world who know the 'correct price' to sell!
Again, I'm no expert but once I'm happy with a company's progress I often allow myself up to half my initial investment to trade (sell when I believe the company has reached it's peak in the hope of buying back in for a little more etc.) This can certainly generate you a buck or two and forces you to focus a little more on the share price movement of the company, which will give you a bigger picture of when 'its run out of steam.' If you get it wrong, then you've always got the other half of you're holding and you can be happy along the lines of 'no one got poor taking a profit!'
Xand |
Thanks Xand- This is really useful...I had done some "value analysis" around its "intrinsic value" which is what led to purchase the stock intially at the c255 price... I'm learning...but still struggle to understand whether a Share/business has hits it peak. |
I did a little analysis myself. I'm no expert but this is what I got:
August profit: 24m (up 20%). Interim statement suggests 10% revenue growth for the remaining 6 months before next statement. Thus in line with previous year 24*1.2 should see profits of 29m. At present company trades on a PE ratio of (544/24 = 22) reducing to (544/29 = 18) if estimate are correct. At the time of August results, PE ratio was (SP = 250 * 170.62 = Mkt. Cap of 425m / 24 = 17) suggesting the company is looking as cheap now as it was then.
So personally I'd take an entry price of around 295-300 and hope to sell out around 340-350 off the strength of the recent rise. Worth noting however the surrounding strengths of the business. It seems CPP have their fingers in a lot of nice warm pies so looking at the bigger picture even an entry now should see a nice return in time.
Let me know what you think!
Best,
Xand |
Thanks Hywel,
I'm still first 6 months into investing/trading...so this insight is of great use. |
Well FWIW i sold out recently, i think it's risen a bit too fast but i am looking to get back in on any significant weakness, although it just keeps going up at the moment! |
Any insight appreciated:
Does anyone have a view as to whether they think this share will continue to rise? Or is it now "over priced"
Thanks |
 Here's a write-up of CPP i just posted on TMF:
CPP Group (CPP) sells credit/debit card protection, identity protection and mobile phone insurance. As the company website says it is a leading provider of Life Assistance products and services with approximately ten million live policies in 14 different countries. It employs approximately 1900 people.
It listed on the main market just over 6 months ago at a price of 235p but has been trading since 1981.
Current numbers:
SP: 260p
Mkt Cap: £450m (FTSE250)
Broker Forecasts for 2010:
Revenue: 331m
Pre-tax Profit: 43.85m
EPS: 18.39p
Divi: 6p
2011:
Rev: 370.6m
Prof: 53.39m
EPS: 21.6p
Divi: 8.5p
Gives a prospective PE of 14 (2010) and 12 (2011)
Yield of 2.3% and 3.3% respectively.
PEGs of 0.4 and 0.7.
Net debt at the interim results in June was £13m.
Renewal rate remained steady at 77%
Positive director speak at the interims:
Eric Woolley, Group Chief Executive commented:
"I am very pleased with the performance of CPP in the first half of 2010. We have delivered a good set of results in line with expectations and achieved a successful listing on the London Stock Exchange."
"These results have been driven by an increase in new revenues and a steady renewal rate, evidence of the global demand for our products and the strength of our business model. In the UK our core business has grown and through successful initiatives such as packaged accounts we are expanding our existing product and channel offering. Internationally we are making real progress with our recently launched markets in Turkey, India and Mexico all showing good growth year on year."
"CPP is a fast growing business with strong cash generation and a robust balance sheet. We are well positioned to build on this first set of results as a public company as we continue to execute on our proven growth strategy in the UK and internationally and so deliver sustainable profitable growth. Whilst recognising the global economic and financial sector uncertainties, I am still encouraged by our medium term pipeline of business opportunities and expect the momentum in the business that we have demonstrated since IPO to continue to deliver a year of growth for the Group in line with market expectations."
Key strengths:
Leading market positions in several established markets and a growing market presence in key emerging markets including Turkey, India and Mexico. It has just made its first small foray into China.
Strong track record of organic growth and profitability, helped by high renewal rates.
Predominantly exclusive relationships with over 200 business partners, principally in the financial services sector, providing annual revenue streams for both parties.
Directors:
The founder Hamish Ogston (now a non-executive director) owns 61% of the company.
A different NED sold his holding of 51696 shares at 275p back in June but bought back them all back at the same price last week.
I hold a small amount. |
Non-exec Director bought 51696 shares today at 275p (£140k), which isn't chump change. Must say he got stung on the price, though for that size in a relatively illiquid company i suppose that's about right.
I took a small position here last week, been meaning to get round to doing a write up of why, if only to clarify my own thoughts. |
Anyone Help?
As I'm to new investing- can anyone provide any insight in the following on CPP:
Is the value already in the Share Price?
Having researched the business, the fundamentals look very strong; and future prospects look good. It "seems" that there is scope for the Share Price to go further (But as I'm pretty new to this- might have got this wrong) |
Not sure if it is a mistake or not, but taken directly from the August half yearly report, which states, "reduction in net debt to GBP13.2m at 30 June 2010 from GBP48.8m at 31 December 2009."
Now a reduction in debt to a very reasonable £13.2m and the intention to pay dividends in the near future says to me that all the signs for this company are positive, boding well for the future. Perhaps someone with a greater knowledge could add a more reasoned comment, but I see nothing in terms of debt to worry about at all.
Good Luck to all. |
Have used this company for years and didn't realised they had listed until I saw the tip in the IC this week. It all looks good except the IC lists net debt of 208% which sounds worrying, but is not mentioned in the article or on here.Is this a mistake by the IC? |
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