Surprising that no existing thread on Debtmatters (DEBT). Big run up this year and Shares are expecting more to come. Been watching for a while but recent news of accelrating expansion has encouraged me on board.

DEBT is a relative newcomer to the market: revenue up 230% to 2.44 at interims to Sept 2005 and pbt up 530% to 818K. In comparison DFD turnover to October 2005 (interims) more than doubled to 6.4m with pbt of 1.86m. DEBT achieved 200 IVA's for the first time in September: this became 344 in January and 534 in March. DFD has approaching 20% of the market which appears to be expanding at about the rate achieved by DFD as their share is constant. From this I deduce that DEBT has a way to go at its exceptional current growth rate. OK a pe around 90 appears high but two years could bring it to 30 and then 10.

From the charts there is terrific momentum in the climb. It may be that we have had two legs of a three-legged climb. Best to be on board for the journey!

Eric

This is not a 'tree shake' at all. It involves all companies dealing with IVA's - DEBT, DFD, DETS, MDCG etc...maybe regulatory bodies are looking into IVA's.

ACG have announced a profit warning - bad marketing and resistance from creditors (i.e. the Banks), alongside the various press comments that the Banks favour their pet charities to do this work at lower cost to themselves rather than the commercial outfits, on top of general chat about better regulation which, although I do not believe it would cause detriment to the two leaders (DFD and DEBT) is nonetheless playing on market fears.

So, it's more serious thatn last time, although I have no reason to believe DEBT's figures will be less than as announced at their interims.

Ges Ratcliffe, Chief Executive of Debtmatters, commented,

"I am delighted to announce another strong set of results as Debtmatters
consolidates its position as one of the UK's leading debt solutions providers.
Growth is accelerating across our entire business and in order to support this
we have made the necessary investments in both infrastructure and management
systems.

"As a result, we have exceptionally strong foundations in place which will
underpin our IVA and secured loan businesses as they continue to grow their
market share. With 636 approved IVAs secured in September, a near threefold
increase over September 2005, and with ISO9001 accreditation in place we are
primed for further growth."

I look forward with interest to the March pre-close update.

Try to sleep easy over the weekend!

Sleeping is not easy nowadays, sd.

See also DFD's profit warning. Will DEBT follow suit?

NB. Even with a 20% downgrade on DFD and DEBT EPS for 2007, they still pass all fundamental criteria for a growth stock. For example, say DEBT delivers EPS of 19.72p instead of the 24.65p currently forecast and say the SP was still 300p, this gives a PE of only 15.2. But we'll still have had growth in EPS of 135%, giving a PEG of 0.11 - not exactly an ex-growth rating.

Looking forward to 2008, where EPS is currently forecast at 34.05p. Again, downgrade this by 20% to 27.24p - growth of 38%. At 300p this gives a PE of 11 and a PEF of 0.29 - still pretty good.

However, the market as ever will probably not be forgiving in the short term. It will require this current spat between IVA's and banks to be resolved. Whereas the banks may have good reason to try to stop some of the freeer and easier operators from selling their services by claiming to be able to knock 65% off anyones debt and still sting the bank for 7,000 a pop, I doubt if the monopolies commission or the charity commissioners will be impressed by their insistence all IVA's are arranged via their chosen charitable operator who seem to charge 5,000 a go.

If the banks subsidise the charity by giving it the 2,000 difference, they can claim 30% tax relief on their gift = 857. But, hey, the banks get charged 2,000 less. So they make a profit on the deal. Now a fundamental tenet of charitable giving , at least when I worked in subsidised theatre admittedly a while ago, is that the donor should not receive a material benefit in return for its gift. That would preclude their receiving any tax relief.

However, short term I doubt the market will be so forgiving, and it will be a struggle to climb back up to 300p by March update. I do expect a fairly hefty bounce sooner than that - which I do not anticipate will be dead cat in nature - which will be a quick exit point for many among us, so prolonging the recovery to what I see as par value of around 300p. I guess dreams of 450p by time of results is now a rather diminished prospect.

Ah well, good luck to all holders and try to keep your collective nerve.

I hope you're right for holder, but I never liked this stock as it trades on a premise of gloom and doom ( but then I don't hold funeral companies either).
The way the sp is going it looks like early investors are takig their profits - so I guess should you and hope for a recovery, by buying on a return to good news.

It's possible the heady days are over - and all the "easy" punters satisfied, therefore it becomes ever-harder to maintain the income - add to that a negative press and this business looks like ambulance-chasers and the like....IMHO

I suspect the fundamentals of this business-model are changed forever, but I am so often wrong.......do you feel lucky?

Below is taken from EK's diary...beware! DEBT may go lower...he is shorting DEBT to 83p.


Debtmatters (DEBT) has quite a lot of debt and I wonder if it starts to have problems whether it will be able to take its own advice? The bottom line is that even though the shares have collapsed they remain a stonking short. Let us take Debtmatters as a case in point. At the half year it generated a post tax profit of 3 million pounds so let us value it at 5 times an annualised figure of 6 million pounds minus debt of 9.5 million pounds equals 20.5 million pounds or 83p a share. The shares still trade at 167.5p so I'd be mad to close my short. I also remain short of Debt Free Direct (DFD)

But why accept EK's PE of 5? Surely 15 would be quite reasonable, given even a reduced rate of growth hereafter. That makes it worth 80.5m or 325p per share.

Let EK plough his furrow. However often he wins or loses, one thing is for certain - he is not making these pronoucements to offer best advice to you and me.

well said stockdog but lets watch to see if the directors come out and buy that will show us either way

Interesting concept, matthewr

Looks like Evil Knieval is right again on DEBT. It is starting to slide, stockdog. Now 158p.

Daily Mail has an article today on DEBT - ''Don't bet your shirt on debt relief firms''

It appears DEBT has made a comeback and defied gravity and Evil Knieval has to eat his words and his shoes...LOL!

Yes, DEBT IS PROVING THAT eVIL kNIEVAL HAS TO EAT HIS HUMBLE SHOES NOW. hAHAHA

DEBT has highlighted a problem in IVA market which is hurting not only DEBT but others in the sector who have until now stayed mum... I estimate that the true asset value per share for Debtmatters to be within 40p to 57p which represents maximum of 300% discount to todays price of 18p..BUY for short-term profit.