Dahua Jixian released a research report, covering HUIZ.US (HUIZ.US) for the first time, giving it a “buy” rating. The target price is 2 US dollars. According to the bank, Huize is a leading insurance technology platform in China, focusing on the digital distribution of long-term life and health insurance products. The bank expects to achieve a compound annual net profit growth rate of 13.9% in 2023-2026, driven by leading product innovation capabilities, a high-quality customer base, and overseas business growth.
According to the research report, I am optimistic about the advantages of Huize in the following areas: 1) The platform-based business model connects multiple parties: Huize connects consumers and industry participants such as insurance companies to the insurance service ecosystem through data-driven and AI-enabled solutions;
2) The leading edge of customized long-term insurance brings sustainable growth: With 17 years of track record and successful experience, in 2022, Huize will become the leading insurance technology platform for the online long-term life and health insurance intermediary market with a market share of 8.8% (in terms of total premiums). The company focuses on long-term insurance products, which have high commissions and stable recurring revenue. With excellent product development capabilities, Huize and insurance partners jointly design exclusive customized insurance products to enhance bargaining power and supply differentiated product portfolios;
3) Target the younger generation and accumulate high-quality customers: In 2023, the Huize customer base grew 10.3% year-on-year to reach 9.3 million, mainly the younger generation from Tier 1 and 2 cities. Huize provides comprehensive one-stop insurance solutions and seeks additional sales opportunities in a high-quality customer base to increase consumer stickiness and unlock more lifetime value from existing customers;
4) Using AI solutions to improve operational efficiency: Huize has integrated its AI-driven products and powerful data analysis capabilities into the insurance service chain to increase operational leverage and optimize customer acquisition costs. In 2023, Huize's expense ratio decreased 7.3 percentage points year over year to 33.1%, while gross margin increased 0.8 percentage points year over year to 37.4% year over year.
5) Seek a second growth curve in overseas markets: In 2023, Huize expanded its brokerage business to Hong Kong, China. In the fourth quarter of the same year, the Hong Kong brokerage business contributed 6% of the company's revenue. Looking forward to the future, Huize plans to expand its sales force and launch more joint customized products with well-known insurance companies. Furthermore, Huize is focusing on the potential of the Southeast Asian insurance market because some regions have technology-savvy young customers and low insurance penetration rates, which are very compatible with their business model in China. Smart Choice aims to contribute double digits to international market revenue by 2024.