Challenger shares rise as FY result beats forecasts
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More news: Challenger shares gained after the investment manager grew its assets under management by 21% in FY24.
Shares were up 6.98% to $7.34 by 2:13pm AEST.
UBS analyst Scott Russell noted that despite the "surprisingly low" statutory NPAT result, earnings beat consensus and the midpoint of Challenger's FY25 guidance range is in line with average forecasts. UBS has a 'buy' rating on the stock.
What they said: "All up, we think market reacts positively to the solid core earnings beat and core business momentum, but perhaps some question marks on the capital position," Russell said.
Challenger posts mixed results, hikes final dividend
The news: Investment manager Challenger reported a mixed earnings card for FY24, as assets under management (AUM) grew 21% but statutory net profit tumbled year on year.
The numbers: Challenger posted group AUM of $127.1 billion, up from $105 billion a year earlier. Normalised net profit before tax (NPBT), up 17% to $608 million, beat the top end of its upgraded guidance of between $555 million and $605 million.
The Sydney-based group also lifted its full-year dividend 10% to 26.5 cents per share.
However, statutory net profit fell 24% year on year from $171 million to $130 million, while analysts had forecast a rise to $213.6 million.
Challenger will target normalised NPBT guidance between $440 million and $480 million in FY25, with the midpoint representing a 10% increase on FY25. This equates to a normalised NPBT guidance range of between $640 million and $700 million.
The context: Challenger said its positive NPBT result was driven by an ongoing strong performance in its life insurance unit and a "disciplined approach to cost management".
Meanwhile, statutory NPAT was hit by the unrealised impact of lower commercial property valuations and changes to UK mortality rate assumptions.
AUM growth was driven by life insurance book growth and strong fund management net flows, the company said.
What they said: Challenger's managing director and CEO Nick Hamilton said: "Our life business performed exceptionally well and demonstrates our expertise in providing guaranteed income to more Australians, with longer tenor terms and lifetime annuity sales contributing to life sales of $9.1 billion".
"Funds management also expanded its offering and capability, launching new investment strategies across Fidante, as well as driving private credit origination in Challenger Investment Management to meet growing demand for higher yielding income strategies," he said.
The source: ASX announcement
