Australia's Challenger climbs to 1-1/2-year high on bright outlook, annual earnings beat

Challenger

13/08/2024 06:38

By Rajasik  Mukherjee
       Aug 13 (Reuters) - Shares of Challenger Ltd  CGF.AX 
rose to their highest levels in nearly 16 months on Tuesday
after the Australian investment management firm beat estimates
on annual earnings, while investors also cheered its fiscal 2025
earnings outlook.
    The stock gained as much as 10% to hit its highest level
since Feb. 20, 2023. Shares marked their biggest intraday jump
since Oct. 20, 2022, and are poised for a fifth consecutive
sessions of gains, if trend holds. 
    Challenger reported a fiscal 2024 normalised net profit
before tax (NPBT) of A$608 million ($400.73 million), a 17% hike
from 2023 levels, buoyed by a 110% growth in the Sydney-based
firm's lifetime annuity sales of A$1.5 billion. 
    Annuity sales are income products, sold by insurance
companies, which provide financial stability to the purchaser
after retirement. 
    Challenger trounced both UBS and Citi's NPBT expectations of
A$600 million and A$603 million, respectively. 
    The company, which increased its group assets under
management to A$127 billion in fiscal 2024, forecast its 2025
NPBT to come between A$640 million and A$700 million.
    Analysts at UBS were upbeat on the 2025 forecast, and said
the midpoint of fiscal 2025 forecast was in line with their
consensus.
    "With Challenger on track to meet its RoE (target) in FY25
and with capital much better than expected due to permanent
benefits, we expect the market to like this result," Citi
analysts wrote in a note. 
    Challenger Life segment, which provides financial security
post retirement, was capitalised with an ability to tackle
different market cycles and support future growth, the company
said. 
    Challenger attributed the jump in profit to lower costs and
strong performance in Life segment, and also declared a final
dividend of 13.5 Australian cents. 
    
    ($1 = 1.5172 Australian dollars)
    

    

 (Reporting by Rajasik  Mukherjee in Bengaluru; Editing by
Sherry Jacob-Phillips)
 ((Rajasik.Mukherjee@thomsonreuters.com;))