Challenger Limited

Growth in AUM Aided Challenger Limited in FY 2018: Challenger Limited (ASX: CGF) ended FY 2018 with total group assets under management or AUM amounting to $81.1 billion which implies the rise on the YoY basis on FY 2017, wherein the company’s AUM stood at $70.0 billion. The management of the company stated that it has been diversifying the distribution as well as product reach which could support the company in tapping robust opportunities for growth. From the past few years, the company has been witnessing strong growth momentum with respect to its AUM which represents robust fund flows in regard to the Funds Management business as well as strong growth in the life sales.

CGF’s AUM (Source: Company Reports)

The Funds Management division of the company witnessed net flows amounting to $5.3 billion in FY 2018 which implies a rise of 8% on the opening FUM or funds under management. The division’s average FUM witnessed the rise of 19% YoY on the back of favourable investment markets as well as robust net flows.

Well-Positioned to Achieve Growth Moving Forward: The management of Challenger Limited stated that the outlook is favourable for the company even though the company is exposed to the challenges because of the low yield environment. According to them, the retirement income solutions demand would be aided by the rise in number of retirees. Additionally, the company’s management stated that the government as well as industry are creating more and more options for the retirees which provide flexibility as well as security in the retirement.

Relative Strength Index or RSI has been applied on the daily chart of Challenger Limited and the default values have been considered. As per the observation, the 14-day RSI is near the oversold region and once it reaches there, it is expected to witness a rise. The fundamentals with improved long-term metrics demonstrate undervalued scenario in view of low trading levels. Therefore, we maintain our “Buy” rating on the stock at the current market price of A$9.770.

REA Group Limited

Resilient Performance: For the three months ended 30 September 2018, REA Group Limited (ASX: REA)reported revenue growth of 17% to $221.9m and core EBITDA growth of 23%. The group’s revenues witnessed the YoY growth of 20% to $807.7 million in FY 2018 and the highest contributor to the revenues, in FY 2018, was Australia. Additionally, the company’s strategic investments in the United States or US as well as in India have witnessed strong growth momentum.
Meanwhile, REA Group Limited’s offering, Agent Edge represents the set of the agent branding products that help in improving the group’s penetration. The products that have been released are Agent Match as well as Agent Elevate. With the help of the Agent Elevate, the agents are encountering 32% more views with respect to the profile page. Additionally, Agent Match has been helping in terms of the leads.

Focus on Strengthening Footprint Globally: The management of REA Group Limited stated that it continues to focus on the Asia region. In FY 2018, the company managed to witness strong growth momentum from this region. The company had made robust deployments in the Asia region via new products as well as experiences. In the release of Q1 FY 2019, the company stated that it expects tighter lending conditions as well as the Royal Commission’s effect on the recruitment of broker to persist in the remaining financial year.

The top management of the company reflected positive views for the Q1 FY 2019 and stated that its strategy would help the company in witnessing the growth moving forward.

Moving Average Convergence Divergence or MACD has been applied on the daily chart of REA Group and default values have been considered. As per the observation, the MACD line has crossed the signal line and is moving upwards reflecting that it was a bullish crossover. With resilient fundamentals in place, we maintain our “Hold” rating on the stock at the current price of A$74.820.  
 
 

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