Challenger Group

Challenger Group have a Buy 2 broker call and a share price target of $6.75 from Australian stockmarket analyst UBS. Business Growth continues to exceed expectations: Asset Management divisional update: Challenger Group provided a positive update on its Asset Management business, which accounts for c60% of group EBIT. The update highlighted (1) CGF’s diverse funding sources on and off-balance sheet, (2) strong business growth – particularly in off-balance sheet Specialist Funds ($3.5bn from $0.6bn 1 yr ago), and (3) asset class exposures and expertise. Confirms MetLife deal, zero consideration: Challenger Group confirmed that it expects to close the MetLife portfolio acquisition at the end of July 2007. This (1) doubles the Challenger Group annuity funding pool from $2bn to $4bn (2) provides scale for asset investment opportunities (3) supports growth in the fee-based specialist funds business, and (4) supports a strong 3-yr earnings growth outlook. Material earnings upgrades, but not just from MetLife: they have upgraded 2-3yr earnings forecasts significantly: 10% in 09E. This is driven by the deployment of MetLife, as well as higher Specialist Fund FUM driving increasing fee income streams. The analysts have a new SOTP-based valuation of $6.75 with their Buy 2 rating unchanged.Key positives for Challenger Group: (1) strategy and rollout accelerating (2) step change potential in MetLife (3) earnings upside potential. Key risks: (1) Mortgage Management spreads (2) Asset contestability (3) asset realisation unpredictability (4) strike rate on deals.

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. Find out the meaning of the recommendations in this primer. Challenger is one of Australia's largest non-bank mortgage lenders, funding commercial loans as well as a range of residential mortgage products offered by a network of preferred lenders under their own brands. It is a multi-faceted financial services organisation, with core businesses in annuities, funds management and administration platforms, financial planning, mortgage financing and margin lending. Challenger has a mortgage book of $21.6 billion. Peter Leith Polson is the Chairman of Challenger Financial and the Managing Director is Michael Tilley. Browse for other stockbroker recommendations. You can use Instalment Warrants to trade CGF. Check your charts and good luck with your share trading!