Potential takeover target, page-32

IMO CGF is just going through a period of indigestion arising from the $500M placement to Japanese insurer MS&AD in August last year. This placement resulted in the ROE falling nearly 2% and statutory EPS falling 8% in the first half. As the EPS is calculated on a weighted basis, there will be a continuing arithmetical affect on the EPS into the second half results. IMO the current P/E is 'temporarily impacted' by this short term affect of the placement on the EPS.

Curiously the share price weakness has taken hold only after MS&AD took their shareholding to just under 10% (following up on the commitment made in the placement announcement) and Caledonia have also continued their buying, now also up to 9%.

CGF opening stated in the half year results that the placement resulted in surplus capital, so my expectation is that we wont see CGF's metrics at full efficiency until first half FY19.

Having held CGF since 2010 it well worth being a patient hold. I definitely see the current weakness as a buying opportunity if one was looking to buy, but I personally have no need to add. Historically a PE of 15 is not necessarily cheap for this stock. It can get materially lower when the market gets volatile.

Gosouth