Manulife Financial: A Great Long-Term Hold In The Canadian Lifeco Space

Core Viewpoint - Manulife Financial Corporation has experienced significant share price growth, with a 23% increase year-to-date and 41% over the past year, driven by sustainable return on equity (ROE) improvements in the Canadian Lifeco sector [2][16] - The company is well-positioned to capitalize on growth opportunities in Asia and wealth management, with a long-term bullish outlook [2][16] Company Overview - Manulife operates globally, with a strong presence in Asia and the United States, serving 35 million customers and managing assets of $1.5 trillion [3] - The company has diversified its offerings beyond insurance to include financial advisory, wealth management, and institutional solutions [3] Q2 '24 Results - In Q2 '24, Manulife reported earnings per share (EPS) of $0.91, a 9% increase year-over-year, surpassing estimates [4] - Core EPS was slightly above consensus at $0.87, aided by a lower effective tax rate in wealth management [4] Performance by Region - Asia's earnings increased by 34% year-over-year, driven by higher claims experience and investment income [6] - In Hong Kong, sales rose by 15%, although competition impacted market share [6] - Wealth and Asset Management core earnings grew by 25% year-over-year, supported by increased assets under management (AUM) [7] Return on Equity (ROE) and Growth - Manulife's ROE for Q2 '24 was 15.7%, with management raising the long-term target to over 18% [8][10] - The company reported a 17% increase in annualized premiums and a 23% growth in new business value [10] Shareholder Returns - Manulife has repurchased 31 million shares for $1.1 billion and increased its buyback plan to $3 billion, reflecting confidence in financial health [12] - The average price target from analysts is $38.57, indicating an 8% upside potential from the current share price, alongside a 4.5% dividend yield [13] Investment Thesis - The company's expanding ROEs and attractive valuation make it a compelling choice for income-oriented investors [15][16] - Despite challenges in the U.S. market, the focus on capital management and strong performance in Asia positions Manulife favorably for future growth [16]