CGF -15.76%: We’re not fans of the annuity provider at MM and today they once again met our expectations after saying that full year pre-tax profit would be at the lower end of the guided range, which was $390-440m. The first lesson here is that such wide guidance implies a lack of clarity /ability to control predict / massage earnings and that’s typical of the CGF business (AGL was another example of this recently and we’ve seen their fate). CGF have a lot of moving parts and is heavily reliant upon favourable markets (by that I mean not too hot, not too cold, not too volatile, but just volatile enough!!). The other lesson for investors around CGF is that analysts often get too optimistic CGF, they tend to drink too much of the CGF cool-aide and that was certainly the case recently. Consensus for pre-tax profit was at $420m so a number at the bottom of the range ~$390m is a ~7% downgrade.
MM remain bearish CGF
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