Asian Expansion Is The Key Driver To Manulife’s $13.15 Fair Value

by Trefis Team
-4.35%
Downside
20.47
Market
19.58
Trefis
MFC
Manulife
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Manulife (NYSE:MFC) is one of the leading insurance companies in the world, with strong growth in the emerging Asian markets. Manulife provides wealth management products and services in 22 countries globally and competes with AIG (NYSE:AIG), MetLife (NYSE:MET), Hartford Financial (NYSE:HIG) and Prudential Financial (NYSE:PRU). We discuss below a few key trends that influenced our valuation of the company’s stock.

See our full analysis of Manulife here

Healthy Growth and Aggressive Marketing in Asia

Asia has been the main focal point for Manulife’s expansion, with record sales observed in the last quarter. The company has recently launched a family-centric marketing campaign through social media and digital platforms such as Facebook, AsiaOne and Yahoo. (See Manulife’s Asian Focused Growth Plans on Track). This expansion is an effort on the company’s part to capitalize on a period of focused growth observed in the region’s economies, and we believe that the investment will pay off. An increase is expected in Manulife’s share in the growing insurance market in Asia. The Asian insurance and wealth management account for 26% of our price estimate for Manulife’s stock.

Canada Still Close to the Heart

Manulife has a strong base of operations in its origin country of Canada. Successful advertising campaigns and marketing strategies have helped it establish a good reputation in wealth management. We expect the company to do well in this geography as a recent survey by the company [1] revealed that customers in Canada are more aware than ever of their financial well being. Canadian Life and Health Insurance Premium Market represents 15% of out price estimate.

Increased Annuity Sales Expected in the U.S.

As a growing number of people in the U.S. approach retirement age, we expect sales of retirement products to increase over the Trefis forecast period. This trend is further supplemented by the fact that an increasing percentage of the American youth is now concerned about their financial futures and would prefer to invest in plans that guarantee income after retirement. (See Hartford Financial Targets Youth To Drive Retirement Plans). The company observed an increase of 11% in sales of retirement product in the U.S. last quarter. U.S. Retirement Solutions account for 17% of the Trefis price estimate for Manulife’s stock.

We have a price estimate of $13.15 for Manulife’s stock, about 20% above the current market price.

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Notes:
  1. Manulife survey finds debt freedom is bigger factor in retirement dreams than lifestyle []
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