- June 09, 2021
We published Q1’FY21 results review of Huize (HUIZ US) to maintain our Buy rating with a lower PT of US$8.7.
Huize reported robust Q1’21 results during the insurance peak season:
- Huize’s GWP grew strongly by 133.1% YoY to a record of RMB1.4bn, among which the first-year premium (FYP) jumped by 221.8% YoY to RMB889.8mn and accounted for 63.8% of total GWP.
- Total revenue was RMB735.0mn, up 195.5% YoY/89.4% QoQ and implying a 52.6% take rate (vs 36.9%/41.4% in Q4’20/Q1’20), thanks to a higher proportion of FYP.
- The seasonally strong revenue performance this quarter outweighed spending, as a result, opex ratio declined substantially to 20.4% vs 32.1%/41.5% in Q4’20/Q1’20, respectively, and therefore adj. net profit came in at RMB38.7mn, up 74.5% YoY.
- In Q1, Huize added approx. another 200k new insurance clients, among which 73.2% were from higher-tier cities. The cumulative number of insurance clients served reached approx. 7.0mn and the cumulative number of insured clients was 58.4mn as of March 31, 2021.
- The average ticket size for LT policy was around RMB4,500 this quarter compared to RMB3,100 in the full year of 2020.
The second quarter revenue was guided to the range of RMB230mn to RMB250mn and we expect its revenue will grow by 47.1% YoY in the full year of 2021E. However, to capture more market share during the peak season, Huize raised the commission rate of the insurance consultants this quarter, which was therefore dilutive to the gross margin. We see the trend will continue in the next few off-season quarters, hence, we lower our gross margin outlook of FY21E and our PT to US$8.7 on 5x FY21E P/GP. Nevertheless, as a leading online insurance platform aiming to provide frictionless experience for customers, Huize’s LT growth story is still intact and we maintain Buy rating on Huize.
