Challenger Financial Services (CGF) Shares Update

Challenger Financial Services (CGF) have maintained their Buy 2 shares recommendation and a $5 share price target from shares analyst UBS. The analyst notes the following positives: (1) positive earnings revisions (2) balance sheet capacity and growth (3) specialist funds capabilities emerging (4) investment spread expanding due to back/front book dynamics. Key risks: (1) Mortgage Mgt potentially harvesting the back book (2) some lumpiness in asset recycling (3) execution on deals. They note the key trends: Funds Mgt FUM +13.3% in Dec Qtr, +29.7% 12mths to Dec06. Mortgage Mgt loans up 1.5% in Dec Qtr, but just 1.0% in resi lending. Total loans up 9.6% in 12mths. Asset Mgt b/s grew 6.1% during the Qtr - off balance sheet FUM up 68% or ~$800m during the Qtr driven by CDI listing. Financial Planning metrics disclosed showed encouraging 6.7% growth in funds under advice during the Dec Qtr. Funds Mgt growth the key driver of upgrades, with some offset in Mortgage Mgt. Asset Mgt off balance sheet FUM growth has the potential to drive further incremental upgrades. They note that this is the 3rd earnings upgrade delivered since the FY06 result in Aug06.

Challenger Financial Services 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. Peter Leith Polson is the Chairman for Challenger Financial and Michael Tiller the CEO. Challenger is the second largest provider of retail annuities in Australia. This reputation also extends to the other investment products and wealth management services that it offers. Challenger, has total funds under management of $15.5 billion at the end of 2006. The company is a multi-faceted financial services organisation, with core businesses in annuities, funds management and administration platforms, financial planning, mortgage financing and margin lending. Find out the meaning of the recommendations in this primer. Browse for other stockbroker recommendations. You can use Instalment Warrants to trade . Check your charts and good luck with your share trading!