Stocks’ Details

Challenger Limited

Long-Term Player: Challenger Limited (ASX: CGF) has recently presented its business prospects at the Macquarie Conference, and highlighted about significant opportunity ahead for retirement income products in Australia market. With this update, the share price climbed up by 6.999 per cent on May 03, 2018.  The group has two core businesses i.e., Life and Funds Management, and is benefitting from superannuation system growth. Funds Management helps to build customer wealth for retirement, while Life business helps to convert retirement savings into reliable income for life. Over the last 10 years, the pool of superannuation savings in Australia has grown at a compound annual rate of 8%. The group now holds fourth largest pension market in the world and the group expects to double its superannuation asset in the next 10 years. The Group recorded in Annuity sale at a CAGR of 22% during 1HFY10- 1HFY18. In the last three years, the group has built new partnerships to deliver annuities with nine major superannuation providers. It has also built a successful relationship in Japan that has already contributed more than $1 billion in sales and is on track to deliver the target of $600 million for this financial year.


Annuity Sales Growth at CAGR of 22% (Source: Company Reports)
However, there was a drop of 13% in total life sales to $1.1 billion against prior corresponding period. Meanwhile, the stock has fallen by 16.69 per cent in past three months as on May 02, 2018 and macroeconomic trend is yet volatile. Hence, we give an “Expensive” recommendation on the stock at the current market price of $ 12.230.

 

Oceanagold Corporation

Brighter Outlook: Oceanagold Corporation (ASX: OGC) has released its financial and operational results for the first quarter ending on 31 March 18. The group recorded strong set of results as sales grew by 21.6% to $196.7 Mn in Q1 FY18 as against of $161.8 Mn in Q1 FY17 on the back of value growth of gold product. EBITDA for the first quarter amounted to $100.9 million while net profit after tax (NPAT) stood at $44.5 million, reflecting strong results and validating high margins of the business. EBITDA margin for the quarter was 51%, which reflects the high margin structure of the business. Return on Invested capital stood at 10% in Q1FY18 which is above the peer group and represented the sense of how well the company is using its money to generate better returns. On the balance sheet front, the Group’s cash balance increased to $89.1 million from $73.2 million at the end of the previous quarter while total available liquidity increased to $119.3 million (excluding of $71.4 million marketable securities) during the same period. Further, the company’s total credit facilities stood at $230 million of which $200 million was drawn as at March 31, 2018. The Company is expected to produce 480,000 to 530,000 ounces of gold and 15,000 to 16,000 tonnes of copper with All-In Sustaining Costs that range from $725 to $775 per ounce sold in the full year on the back of increase in the reserve base (net of depletion) and identifying the new exploration targets, and seeking other growth opportunities via accretive investment in high exploration area.
 

Robust EBITDA Margin and Returns (Source: Company Reports)

During the first quarter, the Company’s joint venture partner Mirasol Resources completed the first stage of drilling at the La Curva Project in Argentina, with assays confirming the presence of a large gold and silver system within the Castora Trend and expecting an additional 3,000 metres of drilling to commence in the second quarter of 2018. Besides this, the Group has appointed Mr Ian M Reid to the Board as Non-Executive Director with immediate effect. Looking ahead to the remainder of 2018, the Company will continue to advance its organic growth program including the advancement of permitting at Waihi and the permitting of the Haile expansion which is expected to commence in the second quarter of 2018. Based on aforesaid development, the consolidated production is predicted to be slightly stronger in the second half of the year. Hence, we give a “Buy” recommendation on the stock at the market price of $ 3.590.

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