The Challenger Ltd (ASX: CGF) share price is seesawing on Tuesday after the company said its FY22 earnings will come in at the top end of its guidance.
The tightened guidance comes as the ASX investment management group held its investor day on Tuesday.
The Challenger share price slipped 0.9% in early trade before clawing back losses to trade 0.5% higher. It then sunk back into the red but recovered again and at the time of writing is up 0.26% at $7.58.
In contrast, the S&P/ASX 200 Index (ASX: XJO) is down 0.07% in early trade.
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Challenger share price edging higher on revised guidance
Management expects the company's normalised net profit before tax guidance for FY22 to come in at the upper end of its $430 million to $480 million guidance range.
Challenger credits its optimism to its growing franchise and strong balance sheet. It also highlighted its Life Prescribed Capital Amount (PCA) ratio of 1.61, which is towards the upper end of its target.
But some investors may have been hoping for more given that the Challenger share price has gained more than 50% in the past year.
Diversifying the income base
The group also reported progress on diversifying its business. It is expanding the Challenger brand to include banking services and asset management.
Challenger is also advancing two key partnerships. One is with Apollo Global Management Ord Shs (NYSE: APO). Both parties are exploring a range of opportunities to help customers achieve financial security in retirement.
Challenger is hoping to form a joint venture (JV) with Apollo to build a lending platform. The companies are also looking to work together on investment and life risk opportunities, and product and distribution.
Meanwhile, Challenger is also aiming to form a JV with SimCorp. The JV will provide an investment operations platform serving customers in Asia Pacific, including Australia.
Challenger said in its ASX announcement:
The proposed joint venture will leverage the capabilities of both Challenger and SimCorp to provide Australia's first fully technology-led, integrated front-to-back cloud-based investment operations platform.
The initiative will provide investment administration as a service to Challenger, Fidante and third-party clients.
SimCorp and Challenger have a 17-year business relationship and the JV is scheduled to start operating in 1HFY23.
Challenger share price leading the pack
The Challenger share price has performed strongly over the past year and is faring better than the Macquarie Group Ltd (ASX: MQG) share price, which is up 21% in the last 12 months.
Challenger is also well ahead of ASX-listed fund managers like the Magellan Global Fund (ASX: MGF) share price and Platinum Asset Management Ltd (ASX: PTM) share price. These shares have lost 13% and 61%, respectively, over the period.
