Challenger Ltd

CGF Details
Rise in normalised net profit after tax for 1H17: Challenger Ltd (ASX: CGF) reported its normalised net profit after tax growth of 8 per cent to $197 million for the half year ended December 31, 2016 while the statutory net profit after tax witnessed a drop of 14 per cent to $202 million over the previous corresponding period. On the other hand, record annuity sales of $2.2 billion were reported. The expansion of distribution relationships and product offering helped the group to boost performance. The result was also driven by momentum in life and funds management business. There has been a six per cent increase in the dividends to 17 cents per share. Normalised Return on Equity was up 60 bps to 18.7%. 

Normalised NPAT and Statutory Profit after Tax (Source: Company Reports)
 
CGF also announced for key distribution deals including a new distribution agreement with BT Financial Group to offer annuities via the BT Panorama platform from first quarter 2018. The group also entered into a global bond product partnership with Standard Life Investments. CGF reaffirmed its full year FY2017 cash operating earnings guidance to be within a range of $620 million to $640 million. The stock price dropped 3.2% on February 14, 2017 post the release of the result but moved up 5.4% in last five days (as at February 13, 2017). We maintain a ‘Hold’ recommendation on the stock at the current price of $ 11.38

 
CGF Daily Chart (Source: Thomson Reuters) 

Nick Scali Ltd

NCK Details
Rise in dividends: Nick Scali Ltd (ASX: NCK) stock soared up 10.7% on February 14, 2017 as the group reported 44.7% growth in its net profit after tax of $20.5m for the half year to 31 December 2016 against the previous corresponding period. This was driven by a 15.5% increase in sales revenue to $118.4m wherein same store sales growth of 10.1% and the contribution from new stores were the key contributors. Economies of scale from volume growth in specialised categories helped the rise in gross margins to 62.0%. Further, operating expenses decreased as a percentage of sales to 36.4% from 39.5% of first half 2016. Further, a fully franked interim dividend of 14 cents per share was up from 9 cents per share for the previous corresponding period.
 

HY17 Results (Source: Company Reports)
 
The market conditions for the second half of the 2017 financial year are expected to remain favorable. As the stock is now trading close to its 52-week high levels, we believe that the stock is “Expensive” at the current price of $ 7.05

 
NCK Daily Chart (Source: Thomson Reuters) 

Cochlear Ltd

COH Details
Boost from portfolio expansion with market-leading products: Cochlear Ltd (ASX: COH) reported for a positive momentum across all markets resulting in first half (HY17) net profit of $111.4m, which is a growth of 19% over prior corresponding period. Cochlear implant units have been up to 16,234 with around 10% growth across both developed and emerging markets. Basic earnings per share of $1.94 per share have been up 18% and interim dividend was raised up to $1.30 per share, fully franked. New product launches, continued investment in market growth initiatives and R&D activities have supported the group’s market leadership position. COH has maintained the FY17 net profit guidance at $210-225m, which is up around 10-20% on FY16. The balance sheet position has been strong and the group aims to target a dividend payout ratio of around 70% of net profit. However, Cochlear warned that Chinese Central Government tender units are expected to be below FY16 levels with the next tender expected during the third quarter, and the group also expects $1.5 million full year net profit impact from the reduction in R&D tax concession rate from 40% to 38.5% as announced by the Australian Federal Government last year. The stock price slipped 3.6% on February 14, 2017. We give an “Expensive” recommendation at the current price of $ 128.95

 
COH Daily Chart (Source: Thomson Reuters)

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