- Gross Written Premiums (GWP): RMB2.06 billion, a new quarterly record.
- Total Revenue: RMB370 million.
- Net Profit: RMB18.7 million.
- First Year Premiums (FYP): RMB1.35 billion, up 110% year-over-year.
- Renewal Premiums: RMB706 million, up 18% year-over-year.
- FYP from Savings Products: Increased 1.5 fold year-over-year.
- Whole Life Insurance FYP: RMB765 million, up 150% year-over-year.
- Short Term Insurance GWP: RMB129 million, up 40% year-over-year.
- Average FYP Ticket Size for Savings Products: RMB79,000, up 59% year-over-year.
- Persistency Ratios: Over 95% for both 13th month and 25th month.
- International Revenue Contribution: 19% of total revenue, a new record high.
- Cash and Cash Equivalents: RMB243 million (USD35 million) as of end of September.
- Expense to Revenue Ratio: Improved by 5 percentage points year-over-year to 24%.
- Repurchase Ratio for Long Term Insurance Products: 40.2% during the quarter.
- Total Number of Customers: Surpassed 10 million by the end of the third quarter.
- Warning! GuruFocus has detected 6 Warning Signs with HUIZ.
Release Date: December 10, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Huize Holding Ltd (NASDAQ:HUIZ) achieved a record quarterly gross written premium (GWP) of RMB2.06 billion in Q3 2024.
- Total revenue for the quarter amounted to RMB370 million, with a net profit of RMB18.7 million.
- The company saw a 110% year-over-year increase in first-year premiums (FYP), reaching approximately RMB1.35 billion.
- Huize's international business contributed a record high of 19% to total revenue, driven by strong demand for premium products.
- The company successfully expanded into the Vietnam market, enhancing its international presence and setting a benchmark for future expansions.
Negative Points
- The gross margin declined to around 27% in Q3, reflecting the impact of expense rationalization in the brokerage channel.
- The company anticipates a less strong Q4 compared to Q3 due to front-loaded demand in the savings product category.
- General and administrative expenses rose significantly, attributed to increased rental and utility costs.
- The transition to new product regimes, such as power products, is expected to take two to three quarters, potentially impacting short-term growth.
- The company did not provide specific guidance for 2025, indicating uncertainty in future financial projections.
Q & A Highlights
Q: What is Huize Holding Ltd's outlook for net profit in the fourth quarter and 2025? A: According to Xiao Minghan, Co-Chief Financial Officer, Q3 was strong due to adjustments in interest rates for savings products in China, leading to front-loaded demand. However, Q4 is expected to be less strong due to a transition to new product regimes and a shift in consumer mindset. Offshore markets, particularly Hong Kong, show strong momentum, but overall, Q4 will likely be weaker than Q3.
Q: How does Huize Holding Ltd view its gross margin and expense trends? A: Xiao Minghan noted that the gross margin declined to around 27% in Q3 due to expense rationalization and regulatory effects. This level is expected to remain steady in the coming quarters. G&A expenses have trended down from Q2, and the company is focused on optimizing its cost structure to improve the cost-to-revenue ratio.
Q: Does Huize Holding Ltd have any plans in the health management industry? A: Xiao Minghan stated that Huize has established an internet healthcare platform, although still in the early stages. The focus is on developing customized products to address market needs, particularly in response to healthcare reforms. The company plans to introduce new products in the next two quarters.
Q: What is the guidance for the 2025 First Year Premiums (FYP)? A: Xiao Minghan mentioned that it is too early to provide specific guidance for 2025 FYP. The company plans to offer guidance during the Q4 results announcement in a few months.
Q: How is Huize Holding Ltd's international expansion progressing? A: The company has made significant progress in international markets, with international business contributing 19% to total revenue in Q3. Huize plans to enter two additional markets, Singapore and the Philippines, within the next 12 months, aiming for international revenue to account for 30% of total revenue by 2026.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
