Manulife Financial (TSX:MFC) is a Toronto-based company that provides insurance and financial services products in Canada, the United States, Asia, and around the world. In recent years, the company has put a very strong focus on its expansion into Asia.
Today, I want to discuss why that strategy has the potential to bear considerable rewards in the years ahead. Moreover, I want to dig into Manulife’s recent earnings and whether its stock is worth snatching up before the midway point in July. Let’s jump in.
How has Manulife stock performed over the past year?
Shares of Manulife have dropped 5.4% month over month as of early afternoon trading on July 10. The stock is still up marginally so far in 2023. Moreover, its shares have climbed 8.4% in the year-over-year period. Investors can see more of its recent performance with the interactive price chart below.
Here’s why investors should get excited about the global expansion of this industry
China has stolen headlines due to its impressive economic growth in the 21st century. However, its neighbours in East Asia have also enjoyed a significant uptick. More noteworthy is the growth of the middle class that Asia has experienced, mirroring similar trends that the Western world enjoyed in the decades following World War II.
South Asia is now set to add to the growing middle class of its continent. By 2030, the sub-region that includes countries like India, Pakistan, and Bangladesh will add 40% of new middle-class consumers. Moreover, there will be one billion new entrants to this class by 2030.
This class will be a power player in the consumer retail space. Moreover, those in the newly minted middle class will desire insurance coverage, as financial services products to manage their wealth. Companies like Manulife are presented with fantastic opportunities throughout the continent.
Should investors be happy with this company’s recent earnings?
Manulife is expected to release its second-quarter fiscal 2023 earnings in August. In the first quarter of fiscal 2023, the company reported core earnings of $1.6 billion — up 6% on a constant exchange basis compared to the previous year. Core earnings per share increased 11% year over year to $0.79.
On the business front, ManulifeMOVE drove incremental sales in Asia. Over 50% of its in-force eligible customers activated the ManulifeMOVE app. Of those customers, 38% made a subsequent insurance purchase.
Asia annualized premium equivalent (APE) sales rose to $1.17 billion in the first quarter of fiscal 2023 — up from $1.08 billion in the previous year. That was powered by growth in Hong Kong. APE sales in Japan and Asia Other were mostly in line with the first quarter of 2022. Moreover, new business value in Asia rose to $372 million compared to $369 million in the first quarter of fiscal 2022.
Why I’m buying Manulife stock today
Shares of Manulife currently possess an attractive price-to-earnings ratio of 8.4. This stock is trading in very favourable value territory compared to its industry peers. Revenue and earnings are geared up for strong growth going forward. Manulife currently offers a quarterly dividend of $0.365 per share. That represents a very strong 5.9% yield.
