Sun Life Financial Inc T.SLF

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

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 health and wellness virtual care platform. The U.S. segment provides employee and government benefits in the United States. Its business units include group benefits, dental and in-force management. The Asset Management business group includes MFS and SLC Management. MFS is an asset manager offering a comprehensive selection of financial products and services. The Asia segment consists of two business units: Local Markets and International Hubs. It has operations in a number of markets worldwide, including Canada, the United States, the United Kingdom, Ireland, Hong Kong, India and others.

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Sun Life Financial Inc

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Post by retiredcfon May 06, 2021 11:53am

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Post# 33141020

TD

Their target is $75.00. GLTA

Sun Life Financial Inc.

(SLF-T, SLF-N) C$67.13 | US$54.71

Q1/21: Good, but slightly weaker-than-expected performance Event

SLF reported underlying Q1/21 EPS of $1.45, up 11% y/y vs. our estimate of $1.53 and consensus of $1.46, reflecting business growth and favourable morbidity, offset by weaker investment activity gains. Underlying ROE was 15.3% (estimate: 16.0%) and BV/share was flat y/y. Similar to MFC, SLF took a restructuring charge of $57mm related to changing its workplace strategy.

Lower-than-expected EPS reflects weaker expected profit in the U.S., weaker-than- expected performance from MFS, and a higher core tax rate. We lowered our 2021E and 2022E EPS by 1%. Our estimates reflect core EPS growth of 13% (2021E) and 9% (2022E).

Impact: SLIGHTLY NEGATIVE

Following are the elements of Q1/21 results that had an impact on our estimates and/or outlook on the stock:

Asset management underlying earnings were up 20% y/y (slightly lower than expected), reflecting strong market performance, positive net flows (MFS net outflows of $0.4bln; estimate: US$2.5bln), and good margins (39%). Outside of MFS, inflows were $10.6bln, much higher than expected. Our estimates reflect underlying earnings increasing 28% in 2021, reflecting slightly lower margins, positive net flows, and the acquisition of Crescent (AUM of $39bln).
Asian underlying earnings were up 3% y/y, reflecting business growth and new business gains, offset by unfavourable mortality. Asian insurance and wealth sales were up 8% y/y and 42%, respectively, reflecting good bancassurance and growth across all channels in India. We expect sales in India to experience some pressure in the near term, reflecting the spike in COVID-19 cases. We forecast 9% 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.