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

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

Financial Services Insurance - Diversified

Sun Life Financial Inc. is an international financial services company. The Company is engaged in providing asset management, wealth, insurance and health solutions to individual and institutional clients. The Company’s segments include Canada, United States (U.S.), Asset Management, Asia, and Corporate. These business segments operate in the financial services industry. The Asset Management... see more

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TSX:SLF - Post Discussion

Sun Life Financial Inc > TD

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Post by retiredcf on May 06, 2021 11:53am

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.