The S&P/ASX 200 Index (ASX: XJO) is flat in morning trade today, but that's not holding this ASX 200 stock back.
The company in question is Challenger Ltd (ASX: CGF).
Shares in the S&P/ASX 200 Index (ASX: XJO) investment management company closed yesterday at $6.88. In morning trade on Tuesday, shares have leapt to $7.57 apiece, up 10.0%.
After some likely profit-taking, shares are swapping hands for $7.31 apiece, up 6.3% at the time of writing.
This strong outperformance for the Challenger share price follows the release of the ASX 200 stock's full 2024 financial year (FY 2024) results for the 12 months ending June 30.
Read on for the highlights!
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ASX 200 stock soars on AUM growth
- Normalised net profit before tax of $608 million, up 17% from FY 2023
- Group assets under management (AUM) increased by 21% over the year to $127 billion
- Normalised earnings per share (EPS) of 60.9 cents, up 14% year on year
- Full-year dividend of 5 cents per share, fully franked, up 10% from the prior year
What else happened with Challenger in FY 2024?
Investors are bidding up the ASX 200 stock today after the 17% increase in full-year profits topped the company's earnings guidance range.
Challenger attributed the increase to the ongoing strong performance of its Life segment and its disciplined approach to cost management.
Life book growth and strong Funds Management net flows also drove the 21% increase in (AUM) to $127 billion.
In other core financial metrics, Challenger achieved a normalised return on equity (ROE) of 15.6%, up 2.9% from FY 2023. This was also attributed to strong momentum in its Life business, Australia's leading retirement income brand.
Challenger Life was reported to be strongly capitalised with a Prescribed Capital Amount (PCA) ratio of 1.67 times.
What did management say?
Commenting on the FY 2024 results sending the ASX 200 stock soaring today, CEO Nick Hamilton said, "Challenger delivered a very strong financial performance, executed on our growth strategy and made strategic investments around the customer and our capability to support our long-term sustainable growth."
Hamilton added:
Our Life business performed exceptionally well and demonstrates our expertise in providing guaranteed income to more Australians, with longer tenor term sales and lifetime annuity sales contributing to Life sales of $9.1 billion.
As for the ASX 200 stock's strategic investments in FY 2024, Hamilton said:
This year we made key decisions that will see us further strengthen and broaden the potential of our business. In our core retirement business, we commenced our customer uplift program that integrates technology and experience.
This will make it easier to do business with us, enable the delivery of more retirement income solutions and position us for growth with customers, advisers, platforms and institutional clients.
What's next?
Looking at what could impact the ASX 200 stock in the year ahead, Challenger is targeting a normalised net profit after tax guidance between $440 million and $480 million. The midpoint of that range would represent a 10% improvement from the FY 2024 results.
On the cost side, Challenger said its scalable platform has helped the business lower its cost-to-income ratio target range to 32% to 34% from FY 2025.
Commenting on the outlook, Hamilton said:
We are in a very strong position for FY25 and beyond, with momentum across Life and Funds Management. We have a clear growth strategy that is orientated around the customer and leverages our core capabilities, underpinned by a strong balance sheet
How has the ASX 200 stock been tracking?
With today's intraday moves factored in, the ASX 200 stock is up 5% over 12 months.
The Challenger share price has gained 11% so far in 2024.
