Forecast updates from both Challenger and Stockland during Thursday’s ASX trading session, with both reinstating previous guidance and offering positive profiles moving forward.
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Annuities group Challenger Ltd (ASX: CGF) saw a strong third quarter and now says it will make guidance for the June year, and at the upper level of that range, confidence that saw the shares leap 10% on Thursday.
The company said it was ‘reaffirming” its normalised net profit before tax profit which it “now expects to be towards the upper end of the $430 million to $480 million guidance range.”
That compares to the $396 million reported on the same basis for 2020-21, and if achieved the 2022 result would see a rise of more than 20% and possibly as high as 25%.
No wonder, then, that investors chased the shares higher – they reached a yearly high of $7.52 and closed at 7.50 for a gain of almost 10%. They haven’t been at this level since early 2021.
Challenger said that its total Life (policies) sales were up 10% “driven by strong institutional and retail annuity sales.”
Group assets under management (AUM) were down 8% for the quarter but that was due to the completion of the previously announced sale of Whitehelm Capital.
CEO Nick Hamilton said in Thursday’s update:
“The Life business maintained its impressive performance, with book growth of 2.8% for the quarter. Sales growth exceeded 10% across both institutional and retail, reinforcing the success of our strategy to extend our customer reach and broaden our distribution channels.
“Product innovation remains a key priority and our market-linked annuity reflects our commitment to meeting the needs of more customers. The market-linked annuity has now been added to approved product lists of key financial advice businesses and initial feedback and engagement from financial advisers has been positive.
“The Funds Management business continues to see significant opportunities in both Australia and offshore.
“Integration of the Bank is well advanced and good progress has been made preparing our term deposits for launch via the retail broker channel. We expect to commence corporate and SME lending shortly, which will support sales growth and margins.”
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Meanwhile property developer and retail mall owner Stockland Corporation (ASX: SGP) has maintained its outlook for steady growth to the end of its June 30 financial year.
In the third quarter update, CEO Tarun Gupta maintained the forecast estimates for funds from operations (FFO)- the best measure for real estate investment trust – per security guidance range at 35.1¢ to 35.6 cents a security, which is in line with prior guidance provided at the first-half result in February.
He said the guidance was based on the residential settlements targeting close to 6,000 lots with the residential operating profit margin above 18%.
“Stockland has maintained a strong financial position, with disciplined cash management, low gearing and solid operational business performance,” he said in an update to the ASX.
To aid the balance sheet, the business will keep selling non-core retail assets and look to create separate funds such as the Stockland Residential Rental Partnership (SRRP) and the Macquarie Park M_Park Capital Partnership.
“While COVID-19 restrictions and extreme weather events impacted various states during the quarter, we have maintained solid operational metrics whilst progressing our strategic priorities to rebalance our portfolio, accelerate the development pipeline, and scale capital partnerships to generate long-term sustainable growth,” he said in the ASX investor presentation.
The distribution for each security for the full year is expected to be within target payout ratio of 75% to 85% of Funds From Operations (FFO).
Stockland securities rose 2.4% to $4.20.
