HuiZhui Reports 21.2% Revenue Growth, Banks Maintain Buy Rating

HuiZhui (HUIZ.US) reported a robust revenue growth in the fourth quarter of 2024, with two major banks assigning a "buy" rating to the company. The financial technology firm's revenue for the quarter reached 2.86 billion yuan, marking a 21.2% year-over-year increase. This growth was primarily driven by the increase in first-year premiums (FYP) and higher commission rates. The FYP grew by 33.3% to 5.579 billion yuan, with significant contributions from lifetime insurance, long-term health insurance, and short-term insurance products, which saw increases of 76%, 2%, and 23% respectively.

Despite the revenue growth, operating costs and expenses increased by 36.3% year-over-year, resulting in a non-GAAP net loss of 1.3 million yuan for the fourth quarter. The full-year non-GAAP net profit was 8.4 million yuan, falling short of market expectations. The gross margin decreased by 7.6 percentage points to 34.7%, primarily due to increased customer acquisition costs and higher operating expenses as a percentage of revenue, which rose to 40.7%.

However, the management emphasized that the cost increase is a short-term phenomenon. They expect to achieve a moderate single-digit net profit margin in 2025 through optimizing agency channel costs and enhancing operational efficiency with artificial intelligence technology. Additionally, the comprehensive commission rate for domestic business has bottomed out, and the regulation on rationalizing commission fees is expected to be implemented in the agency channel by mid-2025 to the end of the year, which is anticipated to benefit the brokerage business.

HuiZhui's international business contributed 38% of its fourth-quarter revenue and 18% for the full year. The company has completed the acquisition of the Vietnamese insurance technology platform Global Care and plans to enter the Singapore and Philippines markets in 2025, aiming to increase the international business revenue share to 30% by 2026. This strategic expansion into international markets is expected to further drive the company's growth and profitability.

Overall, HuiZhui's strong revenue growth, international market expansion strategy, and expected improvement in profitability have led two major banks to maintain a positive outlook on the company's long-term development prospects, both assigning a "buy" rating. The company's ability to navigate cost pressures and maintain a robust business model positions it well for future success in the competitive financial technology sector.