Challenger (CGF) result hits the mark

Stock

Challenger Financial (CGF) $6.77 as at 13/08/2019

Event

Shares in the annuity businesses have traded higher today with an inline result enough to please the market’s downbeat expectations. The result saw normalized net profit before tax sneak in to the bottom end of guidance, marginally below consensus expectations.

Shares in Challenger have been under pressure with lower interest rates reducing the appeal of annuity products.  Their pre-tax profit did manage to edge higher in FY19, however on today’s guidance, it is expected to be down in FY20. NPBT guidance was given as $500m-$550m – a 10% spread from top to bottom and the higher hurdle of guidance in line with the FY19 result.

On a statutory basis, Challenger looks a little worse for wear with the company taking a $88m negative investment experience hit. They were able to hold the dividend, as many expected and have guided to a flat payout amount for next year.

Challenger (CGF) Chart

Challenger Limited Daily Chart

Market Matters Take/Outlook

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