becoming true…
Assuming you actually care about understanding the fundamentals of the companies you discuss on this forum, one possible way of appreciating why the graph you have attached makes very little sense is by looking at the current level of CGF’s Net Tangible Assets (NTA) and Normalised Earnings per share.
NTA is essentially derived from subtracting the PV of all annuity liabilities (plus hybrid debt) from the market value of the assets in the Life Investment Portfolio, therefore it is a pretty transparent figure.
NTA/share is currently close to 5.00$, and FY20 normalised NPAT is expected to be around 0.61$/share, of which 0.36$/share will be paid out in dividends; therefore, come June 2020 and all else being equal, the new NTA/share will be around 5.25$/share.
According to your chart, the SP should be around 3.85$ by then, i.e. ~27% below the expected level of NTA/share.
Are you able to provide me with a single fundamental reason why a business that generates a pre-tax ROE in excess of 15% pa (on a normalised basis), and whose average cost of funding is below 5% pa, should trade at such a discount to NTA (absent a GFC-type event)?
becoming true…@homelyonAssuming you actually care about...
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