Two ASX stocks that rose high - Challenger Ltd and JB Hi-Fi Limited

Challenger Ltd

CGF Details
· Two annuity relationships with major firms: Challenger Ltd (ASX: CGF) stock surged over 4.3% on October 27, 2016 driven by their two major annuity relationships. The group made a new annuity relationship with AMP to offer the group’s annuity products via AMP’s investment and administration platforms. The group also made a new annuity relationship with Mitsui Sumitomo Primary Life Insurance Company who is a major provider of Australian dollar annuity and life insurance products in Japan. CGF stock have been on uptrend since the last three months which rose over 12.4% (as of October 26, 2016). The group delivered a decent FY16 performance, wherein the overall assets under management, rose 10% to $60 billion. Normalized profit after tax enhanced 8% while the board declared a final dividend of 16.5 cents, leading to a total franked dividend of 32.5 cents a share. These distributions are at the top of the group’s target range of 45% and 50% of normalized earnings per share. Moreover, the AGM addresses have also been positive.

· Recommendation: We give a “Hold” recommendation on the stock at the current price of $ 10.94

JB Hi-Fi Limited

JBH Details
· Competitive cost of doing business: JB Hi-Fi Limited (ASX: JBH) stock surged over 0.89% on October 27, 2016 post the AGM. The group reported that their first quarter of 2017 was on track while the group’s JB HI-FI sales guidance of total sales of circa $4.25 billion for fiscal year of 2017 was on track. The major drivers of the group are favorable. The group delivered a sales of $3.95 billion, for fiscal year of 2016 while the overall sales surged 8.3%. Gross profit enhanced by 8.4%, while the gross margin enhanced by three basis points to 21.9%. Even operating costs are on track while the group maintained their low cost of doing business via their ongoing focus on productivity and minimizing indirect expenditure. Store wages remained well controlled during FY16. Online sales surged 35.8% in FY16. Unique visitors to JB HI-FI’s websites averaged 1.3 million per week during FY16.

· Recommendation: JBH generated 41% returns during this year to date (as of October 26, 2016) while we maintain a “Hold” recommendation on the stock at the current price of $ 28.26

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