Challenger（CGF.US）UBS SnapShot： FY24 Result

Investment Rating - The report assigns a "Buy" rating for Challenger Financial Services Group with a 12-month price target of A$8.00, indicating a potential upside from the current price of A$6.88 [2][9]. Core Insights - Earnings and dividends exceeded expectations due to improved core margins and reduced costs, leading to a positive market reaction despite some concerns regarding capital position [6]. - Normalised NPBT increased by 17% to A$608 million, surpassing both UBS estimates and consensus [3]. - The Life EBIT rose by 17% to A$634 million, also above consensus expectations, reflecting strong operational performance [4]. Financial Performance - Normalised NPAT was reported at A$417 million, aligning with UBS estimates and consensus [3]. - Final dividend per share (DPS) was set at 13.5 cents, slightly above UBS and consensus estimates [3]. - Life annuity sales decreased by 6% to A$5.19 billion, which was above UBS estimates [4]. Guidance and Projections - For FY25, the guidance for normalised NPBT is set between A$640 million and A$700 million, with consensus at A$669 million [5]. - The effective tax rate is projected at 31.3%, with a cost-to-income ratio expected to improve to 32-34% [5]. - The report anticipates a normalised pre-tax ROE target of RBA cash rate +12%, currently at 11.2% post-tax [5]. Market Position and Valuation - Challenger is recognized as the dominant annuity provider in the Australian market, with a diversified financial services portfolio [12]. - The report highlights a strong balance sheet with a PCA ratio of 1.67x, indicating improved capital adequacy [4][6]. - Forecasts suggest a price appreciation of 16.3% and a dividend yield of 4.0%, leading to an overall forecast stock return of 20.3% [11].