Investment Matters

Company News: Challenger, HT&E

The budget presented a further positive backdrop for Challenger Financial Group, with the inclusion of an income covenant in the Superannuation Industry (Supervision) Act 1993.  Essentially this change shows the government's intent to support the superannuation industry to create more mainstream pooled lifetime products, which is the space in which Challenger dominates and will grow significantly as the number of retirees in Australia rises.  Challenger rallied +4.75% the day after the budget as a result.

Otherwise, the budget has little impact on our portfolio companies.

Here, There and Everywhere (HTE) held their AGM and noted that they were trading in line with, or above, analyst consensus forecasts of $113-114m EBITDA.  As recently reported, they have received inbound offers for the Adshel business.  It was also reported that they are open minded to holding or selling this business, it just depends on value.  We believe that absent a “knock out” price for Adshel, HTE are better to focus on integrating and building on what is a unique complimentary set of assets (being radio and outdoor advertising).  At current prices HTE trades on a PE of 11.9x underlying earnings (below the market average – 15.5x) i.e. it is inexpensive.