Challenger shares shed 6% as first-half profit misses estimates
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More news: Challenger was the worst performing stock in early trading after the investment manager's first-half normalised profit came in 2% behind market estimates.
Challenger shares were down 6% to $5.76 at 10:40am AEDT, having retreated nearly 20% over the last 12 months.
UBS analysts noted that in Challenger's key life insurance division, cash operating earnings (COE) margins were 3.22% below consensus forecasts.
What they said: "Overall strong sales, but softer COE margin outlook likely to drive [consensus] downgrades," the analysts said.
Challenger lifts first-half profit on revaluations
The news: Investment manager Challenger has lifted its first-half profit by 28% on the back of commercial property revaluations.
The numbers: Statutory net profit for the six months to December rose 28% to $72 million, following accounting valuation changes to Life Risk assets and revaluation of commercial property. Normalised net profit was up 12% to $225.2 million, while the group will pay an interim dividend of 14.5 cents a share, up from 13 cents a year ago.
Group assets under management rose 3% to $131.4 billion while funds under management (FUM) also rose 3% to $121 billion. Lifetime annuity sales jumped 24% to hit a record $583 million.
The context: Challenger CEO Nick Hamilton said the company had reset the business over the last three years to deliver stronger earnings. “Challenger enters the second half of the financial year in great shape,” he said.
Sales across the group’s Life business maintained its momentum, with record retail lifetime and Japanese annuity sales, while funds management also expanded its range of investment strategies and managers. The group continues to expect full-year normalised net profit after tax to come in between $440million and $480 million.
The source: ASX
