Challenger Financial (CGF) Share Recommendation

Challenger Financial (CGF) have an unchanged Buy 2 recommendation and a share price target of $4.20 from stock analyst and investment bank UBS. UBS have noted that Asset management side of the business have exceeding expectations on and off balance sheet growth. UBS note that " Specialist funds now $1.3bn with $0.5bn more listed this week (CDI). Assets mgd for Life Co. (on bal. sheet) also likely to grow after 3 yrs of portfolio realignment. Portfolio mix is trending towards targeted 30/30/30/10 mix of prop/infra/FI/other. Our valuation at 1.5x historic cost Book Value does not capture recycling potential and specialist funds 'optionality'. Fee income drives upgrades." With regards to mortgage management, it was a weak quarter. "1.8% lending book growth in Sept Qtr disappointed due to o/weight NSW exposure, mix shift to fixed rate lending (CGF u/w) and some competitive mkt pricing. Growth compares with 3.4% in June Qtr and 2.7% in Mar Qtr. Interstar's originator intermediated model has a lead-time to address these issues. Back book dynamics and cost flexibility leaves profit growth profile largely intact (down 1-2%)." With regards to funds management, Australian equities are doing well. "Total FUM growth of 6.2% in Sept Qtr exceeds our 1H07 forecasts, leading to minor upgrades. Aust equities continues its momentum, with FUM up 9.4% in the Qtr even with flat markets. Net flows show good (~50/50) mix of retail and insto money. YTD performance implies performance fees may exceed the high water mark of FY06."

Challenger Financial Services Group Limited is listed on the Australian Stock Exchange (ASX) under stock code CGF. You can view their investor website here. CGF was listed on the ASX on 23 December, 2003. Challenger financial is a multi-faceted financial services organisation, with core businesses in annuities, funds management and administration platforms, financial planning, mortgage financing and margin lending.. A previous Challeneger Financial stock recommendation. Find out the meaning of the recommendations in this primer. Browse for other stockbroker recommendations. Check your charts and good luck with your share trading!