Manulife 2q09 press release

Manulife 2q09 EPS up to C$1.09, exclude 1 time tax adjustment, EPS C$1.00, better than wall street's expectation C$0.66 and inline with Bilibala Finance's C$1.00.

Highlight:

• Manulife press release
• 2q09 EPS up to C$1.09 from C$0.66 in 2q08;
• 2q09 MCCSR up to 242% from 228% in 1q09;
• Dividend cut to C$0.13/qtr from C$0.26 in 1q09;
• 2q09 NBEV up to C$644M from C$543M in 1q09 and down from C$838M in 2q08;
• 2q09 Sum at Risk down to C$21.4B from C$30.2B in 1q09 and expected profit up to $980M from (C$639M) in 1q09
• 2q09 AOCI down to (C$2.9B) from (C$2.2B) in 1q09 due to FX loss
• 3q09 earning will have a C$0-C$500M hit on change in reserve assumption
  

Bilibala Comment:

• Result inline with my expect
  
• Why should Manulife issue $3B shares in 1q09 if it planned to give out $1.8B dividend per year? To be fair to its shareholders, dividend cut is a reasonable move
• Dividend cut will also boost Manulife's embedded value
• Worry about Manulife's liquidility due to dividend cut is not logical because 1) MCCSR up to 242% 2) Cash & ST bond balance up to $17.1B from $12.2B in 2q08, enough to cover the sum at risk
  

Bilibala Outlook:

• expect 3q09 corp bond rate will go down fairly=> negative
  
• expect 3q09 stock market will go up sightly => positive
• expect 3q09 Canadian dollar will go up sightly => negative
• expect 3q09 EPS will go down from 2q09
  

Bilibala fair value

• Up to C$42.0