Huayuan Securities Initiates Coverage on YUNFENG FIN (00376) with "Buy" Rating, Citing High New Business Value Growth and Unique Investment Management Capabilities

Stock News12-19

Huayuan Securities has initiated coverage on YUNFENG FIN (00376), assigning a "Buy" rating. The company's core life insurance business demonstrates stable performance with an upward trajectory, achieving robust growth in both H1 2025 earnings and new business value (NBV). Its asset allocation strategy emphasizes high-quality global investments, with a notable edge in fixed-income capabilities. Key highlights from Huayuan Securities' report include:

**Strong Presence in Hong Kong Life Insurance Market with Tech-Driven DNA** YUNFENG FIN completed its acquisition of MassMutual Asia in 2018, establishing a stable and high-value insurance business as its cornerstone, providing a solid foundation and cash flow. The company benefits from a stable shareholder structure and tech-savvy management. Major indirect shareholders include Yunfeng Financial Holdings Limited and MassMutual Life Insurance (a top-five U.S. life insurer by 2024 revenue, per Fortune 500 rankings). Chairman Yu Feng, a co-founder, has consistently focused on cutting-edge technological shifts—from early internet and consumer sectors to fintech and AI—showcasing forward-looking industry insights. Since 2019, Dr. Xiao Feng, Chairman of HashKey, has served as an independent director, contributing strategic vision.

**MassMutual Asia: A Rising Leader in Hong Kong’s Life Insurance Market** *Liability Side*: From 2020–2024, MassMutual’s new business market share in Hong Kong rose from 1.1% to 1.8% (measured by annualized premium equivalent, APE), ranking 12th–15th in the industry. Its flagship universal life products offer stable dividends, while newer multi-currency dividend-paying annuities have gained traction. In H1 2025, buoyed by Hong Kong’s insurance market boom and operational efficiency, NBV and APE surged YoY (+81% and +107%, respectively). Driven by NBV growth and cost control, MassMutual delivered steady increases in embedded value (EV) and contract service margin (CSM): EV CAGR reached 7.6% (2020–2024), with H1 2025 up 5.7% YoY; CSM CAGR hit 6.1% (2022–2024), rising 16.6% by H1 2025 versus end-2024.

*Asset Side*: 1) **Portfolio Composition**: Nearly 90% allocated to fixed-income and cash assets, aligning with its universal insurance product strategy. 2) **Global Diversification**: Backed by MassMutual U.S., the company invests across 15+ regions, with U.S. assets comprising 78.3% of its portfolio as of H1 2025. 3) **Investment Edge**: A strategic partnership with Barings grants access to top-tier global resources. MassMutual Asia’s fixed-income yield averaged 4.5% in H1 2025 (+0.1ppt YoY), outperforming AIA’s 4.2%, underscoring its strength in fixed income.

**Risks**: Potential shortfalls in insurance sales, capital market volatility, and macroeconomic uncertainties.

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