Bullboard - Stock Discussion Forum Sun Life Financial Inc T.SLF.PR.H

Primary Symbol: T.SLF Alternate Symbol(s): T.SLF.PR.D | T.SLF.PR.E | T.SLF.PR.G | T.SLF.PR.J | SNLFF | T.SLF.PR.K | SNLIF | SLFIF | SLF | SUNFF | T.SLF.PR.C

Financial Services Insurance - Diversified

Sun Life Financial Inc. is a Canada-based international financial services company, which offers asset management, wealth, insurance and health solutions to individual and institutional clients. Its segments include Canada, United States (U.S.), Asset Management, Asia, and Corporate. The Canada segment provides protection, health, asset management and wealth solutions. It also offers a premier... see more

Add To Watchlist

TSX:SLF - Post Discussion

Sun Life Financial Inc > TD Upgrade

View:

Post by retiredcf on Feb 11, 2021 11:25am

TD Upgrade

Bump their target by two bucks to $75.00. GLTA

Sun Life Financial Inc.

(SLF-T, SLF-N) C$61.74 | US$48.50

Q4/20: Good Quarter; Forecasting 10% EPS Growth in 2021 Event

SLF reported underlying Q4/20 EPS of $1.47, up 10% y/y, vs. our estimate of $1.36 and consensus of $1.39, reflecting business growth and favourable morbidity, offset by weaker investment activity gains (asset repositioning, AFS impairments, weaker credit experience). Underlying ROE was 15.4% (estimate: 14.3%) and BV/share was up 6% y/y.

Better-than-expected EPS reflects stronger wealth management earnings, partially offset by weaker investment experience. We raised our 2021E and 2022E EPS by 2-3%. Our estimates reflect core EPS growth of 10% (2021E) and 9% (2022E).

Impact: SLIGHTLY POSITIVE

Following are the elements of Q4/20 results that had an impact on our estimates and/or outlook on the stock:

Asset management underlying earnings were up 19% y/y, reflecting strong market performance, positive net flows (MFS positive net flows of US$1.5bln; estimate: US$1.7bln), and good margins (41%). Our estimates reflect underlying earnings increasing 23% in 2021, reflecting slightly lower margins, positive net flows (~ $3bln quarterly), and the acquisition of Crescent (AUM of $39bln).
Asian underlying earnings were down 19% y/y, reflecting asset impairments (investment in fund managed by JV in India) and weaker credit experience, partially offset by good business growth. Asian insurance and wealth sales were up 11% y/y and 59% y/y (new products in India, strong H.K. pension sales). We forecast 6% growth in Asian expected profit (including benefits of new bancassurance partnership) and stable investment experience going forward.

TD Investment Conclusion

The premium valuation that we assign to SLF in setting our target price reflects: 1) lower interest-rate sensitivity (e.g., MFS and Group businesses); 2) industry-leading, very solid capital levels; 3) strong track-record of earnings stability; and 4) two of the company’s more important growth drivers—Asia and the U.S. Group Insurance— support strong growth and higher ROEs. The rationale for favouring MFC over SLF remains relative valuation. We continue to rate SLF BUY.