Challenger (CGF) meets reporting expectations but CEO to depart
CGF +0.78%: Released FY21 earnings this morning that were smack on expectations, both in terms of earnings for FY21 and guidance for FY22. Normalised pre-tax profit of $396m for FY21 will jump by ~15% over the coming 12 months if they meet the midpoint of stated guidance (pre-tax profit $430m-$480m) as continued strength in annuity sales (sales doubled in 2H21 to $2.4bn) underpin the ongoing turnaround in the business. Higher interest rates would help as would an uptick in funds management fees. CGF have had a difficult time through COVID having cut risk in their book at the lows, battling an extended period of super low interest rates, however there is value there trading on ~14x earnings that are growing.
MM is neutral CGF, seeing some value around $5.86
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