UBS highlights the trade-off in trying to simultaneously support both sales and ROE in a falling credit spread environment.
The broker suggests headwinds emanating from domestic lifetime annuity sales and rising risks to Japanese AUD annuity sales mean the company may need to extend pricing support. Margins appears set to continue compressing.
Neutral maintained. Target reduced to $12.85 from $12.90.
Sector: Diversified Financials.Target price is $12.85.Current Price is $12.36. Difference: $0.49 – (brackets indicate current price is over target). If CGF meets the UBS target it will return approximately 4% (excluding dividends, fees and charges – negative figures indicate an expected loss).