Okay, hello everybody, and welcome to Sidoti's August Micro Cap Conference. My name is Brendan McCarthy. I'm an analyst here at Sidoti, and I'm pleased to welcome Huize Holding Limited. They are an insurance brokerage company based out of China, and they are traded on Nasdaq under the ticker HUIZ. I'm pleased to welcome Co-CFO Ron Tam. He's going to be presenting with us today. Before I hand it over, a quick reminder: the Q&A tab is located right at the bottom of the screen there. Feel free to type in any questions throughout the presentation, and we can save time for Q&A at the end. With that said, Ron, take it away. Thanks, Brendan. Good morning everyone in the U.S. It's my pleasure to be here today and to walk you through our equity story. We've actually been around for quite some time. We've been listed on the Nasdaq Stock Exchange since 2020. Actually, we were one of the first Chinese companies to get IPO'd after the COVID outbreak. That gives you context as to when we were listed. As a company, we've been around for 19 years. We are actually one of the leading InsurTech players in China. We are a Chinese company, but we are also quite international, with over 30% of revenues now coming from the ex-China market. That includes Hong Kong, that includes Vietnam, and also we are entering Singapore. We are now an international franchise. We are not just a Chinese company, although our roots are grounded in Tianjin, and that's where our headquarters are located. In terms of the management team, I think a very quick snapshot of our exco. Myself, I am responsible for obviously the strategic financial matters of the group. I'm also head of the International Business Development, having built the Hong Kong business, the Vietnam business, as well as Singapore right now. I joined the company in 2020, and I'm an ex-banker with Goldman Sachs in my early days of my career. The rest of the team actually comes from mostly insurance companies background. Our founder, CEO Andy, he was with Ping An, which is the top insurance company in China, and he founded this company in 2006. We were actually one of the first frontiers, or pioneers in the online insurance brokerage space in China, and we are obviously one of the leading players now. Leo is our President. He's previously with Star Insurance and AIG in China. The rest of the team is also coming from the likes of KPMG, ICBC, which is a top Chinese bank, and also Cigna joint venture in China. Mostly coming from leading insurance and financial institutions background with a local and global experience combined. In terms of the company's mission statement, I think we are proud to say we are one of the leading insurance technology platforms in Asia because we're now not in just China, we're also in Hong Kong, Vietnam, and now going to Singapore. Our main value proposition is to connect consumers with carriers, which is our insurance company partners, and also intermediaries. This includes obviously insurance agents, and also any intermediary that has, you know, customers that can be monetized in the insurance product. Our ecosystem is fully digital and it's AI-driven. We are now proud to say we are one of the few InsurTech players in China and in Asia that actively adopts AI in our solutions. On the next slide, you can see that we, you know, in terms of the value propositions to each partner in the ecosystem. For example, in the insurance carriers vertical, what we provide is digital transformation solutions for insurers. Obviously, they do not have to incur the CapEx in the IT spend. They can just connect to an appraiser, and our platform can overnight turn the insurers into digitally connected with consumers on multi-channels, online and offline. This saves a lot of the admin costs on development and also obviously helps them connect to the mass retail market very efficiently. On the customer side, obviously, what we want to provide to them is a transparent solution and transparent pricing. Many products to choose from. They don't have to only pick one or two providers. They can get access to over 120 providers that are available on our ecosystem, and also provide a very streamlined digital transaction experience. In terms of the application, underwriting, and the claims processing, it's all done on the mobile app or in the digital channels. No paper filling, no form filling, and all that. For the agents, what we empower the agents is obviously, they can connect to our platform to sell products to their customers. The digital tools that they provide for the agents are, you know, top-notch and very, very convenient to use. They can use that to help customers buy insurance policies. They can use that to manage the CRM, manage the customer base, to extract more value from the customers going forward, and better serve them as well. Finally, the intermediary side, you know, we can work with many different intermediaries. Typically, these are offline merchants, you know, conglomerates. This could be, you know, agencies or brokers who do not have the digital setup that we have. Basically, we are a platform provider for these intermediaries, for them to utilize our platform to sell insurance to their customers. That is also a digital transformation product for them or solutions for them. In terms of our business scale, we have been ranked number one in terms of independent online life and health distribution in China. We are a partner of choice with over 130 leading insurance companies, with the bulk of it in China, but nowadays also in Vietnam as well as Hong Kong. For distribution partners, we have over 10,000 of them. Many of them are, as I mentioned, the intermediaries that could be working with us to sell insurance to the customers. We have over 10 million policyholders on our platform. Since 2006, over 19 years of operation history, we have accumulated 10 million policyholders, and again, predominantly most of them in China, but nowadays we're also in Hong Kong and Vietnam. Our GWP, which is the gross written premium, is a metric that is used to measure insurance distribution. In the e-commerce world, this would be GMV. Our GWP is $844 million last year. We are obviously recognized as a top five player in China. We have almost $200 million of revenues and have been growing consistently in the past few years, especially during the COVID time where China was still under lockdown situation. We can see that business continued to grow, and also digitalization has been very helpful in terms of solving the pain points for insurance distribution during that difficult time. The adoption of it also accelerated during that time. I mentioned the internationalization strategy since 2023. We have over 30% of revenue that we're targeting this year coming from international markets. We have AI integration into our platform. We have a proprietary large language model, which we have been privately training with our own proprietary data to basically generate a lot of AI solutions for the platform. We have a deep-seek integration, which I can mention in a later slide, which has improved efficiency and product matching accuracy to a very high level. To visualize how we do distribution on our platform, we have three main models. We have a direct-to-consumer channel, which means we use our own Quasar logo, our own brand name, and we reach out to the consumers directly through mostly social media channels. On this one, it's the TikTok of China. We do live streaming. We also do a Red Note, you know, Xiaohongshu, which is a very popular social media app in China, kind of like Pinterest. Obviously, the WeChat ecosystem, we have mini programs. We also have a mobile app that addresses directly to consumers, and consumers can utilize our app to ask for recommendations, to look for the best products, and also obviously to make the purchase seamlessly and digitally. We have a B2B2C, which is the intermediary model. You can see on this slide, you can see this is a very popular influencer or KOL in China that talks about insurance. There are literally thousands of these people operating in the country. This model has been extremely scalable for Huize, and we are also replicating this business model in Vietnam right now, and also the rest of Southeast Asia. We think that this is the right model to reach out to the Gen Y and Gen Zs, which are becoming the major force of consumer buying insurance as they reach their 30s, when they start to form families and have kids. This is the best way to reach out to the mass retail market, the most efficient way to reach out. Basically, we're social media, pushing content to educate consumers and to make them aware of insurance requirements, and then lead generations generate from these channels. Our platform helps monetize these leads for our partnerships. Lastly, the B2A2C is the agent empowerment business. Any agent that is licensed in China, and nowadays in Vietnam, can connect to our platform, and register on our platform, and then immediately they get access to over hundreds of insurance providers' products at the best commission rates. Obviously, the most important thing is they can serve the customers digitally on the mobile app. Our customer base has been very much consistently growing over the past few years. You can see from 6.5 million to 10.6 million last year. We broke the 11 million mark already this year, and it's still growing consistently. You can see that the average ticket size, which is the wallet share, is improving as well, from CNY 40,000, which is around $5,000- $10,000 this year, which means that, you know, increasing trust and engagement with the customers that we have. We have a relatively young customer base, 35 years of age on average, 68% from top-tier cities of China, which would literally mean the top 20 GDP regions of China. We have a very high persistency ratio, 95%, which is very important for our insurance company partners because they measure us on this KPI, which means that our customers are renewing the policies. 95% of the customers renew the policies, and we are talking about 20-year, 30-year policies that we typically sell on the health product side. You can see that the cross-selling and upselling opportunities have been demonstrated. We have a purchase rate of 40%, which is quite high. Again, this speaks to the trust that our customers have on our platform. I think the service quality that they provide to our customers through the platform is also something that is a very big testament to the brand in China. We can see some of these KPIs here, you know, 99% satisfaction rate. Most importantly, we actually help our customers get claims processed efficiently, provide the expert support for them when it comes to like health claims or somewhat controversial claims. We always stand by the customer. CNY 800 million, which is $100 million plus settlement amount in 2024. This is probably the leading number in whole China. 1.3 million families served just alone in this year, last year. For the insurance company carriers, you can see some names here. The key highlight is that we are working with big brands in China and also international players, such as Prudential, Manulife in Hong Kong, AIA, and also in Vietnam, we're working with the top players. Not only do we just distribute products, we also co-develop insurance products with our carriers' partners because what we have is customer insights, and what we have is data accumulated over 18 years of operations. What we can do for them is we can white label product design for the insurers, and then obviously what we can secure is exclusive marketing rights to that product. That has been very instrumental in the success of our business model. You can see that 86% contribution to total GWP in 2024, fourth quarter from life and health, and of that 53% is co-branded exclusive products that we co-develop with the carriers. This is a major move for us in the business. AI, I talked about, I'm not going to spend too much time, but what we do is we have deployed AI tools and technology throughout the whole platform business process, from the front end, from the customer acquisition side, lead generation, customer servicing, chatbots for customer service, claims processing, and so forth. You can see that we are looking at improving operating leverage, and we can do probably 10x the business volume without obviously 10x of the human resources. We can probably look at a pretty much a non-linear kind of relationship. Employee productivity, and you can see from 2019 to 2024, has improved five-fold. That also speaks to the operating leverage that we have. I mentioned all these AI points just now. I'm just not going to repeat. It's basically, also in terms of risk management, underwriting, we have AI solutions that will help reduce a downing time to as quick as one second. We also reduce fraud rates, and risk identification rate has much improved with the deployment of the AI technology. The China market growth is still structurally very attractive. I think over the next 10 years, we're looking at a very strong CAGR, double-digit CAGR, irrespective of China's macro headwinds. I think that obviously the lingering trade war situation, but I think the China economy has been resilient. Insurance distribution, I think, is increasingly going to be in the favor of brokerages such as ourselves. You can see on the lower right-hand corner, the makeup of the insurance distribution in China from agents' perspective or brokers is still a very very small fraction of the overall pie, or 6%, compared to just say Hong Kong, 30%, which is where I am right now. In the U.S., it's 52%. You can look at China as growing that 6% number towards more like 30% in the next 10 years. The pie is also enlarging, and also the share of the pie is also increasing. I think structurally, the market opportunity is very much intact. Obviously in the Hong Kong side of things, we are trading a lot of the wealth outflow from China, for overseas allocations. We have been in business in Hong Kong since 2023. Right after the COVID reopening, we have been capturing that momentum, and the Hong Kong business growth is very strong. That leads to our Singapore expansion, which is that we have just been licensed by the Monetary Authority of Singapore, which is the regulatory body in Singapore, to set up shop in Singapore as well. This leads to the next slide, which is the international business. We have entered Southeast Asia. I think Southeast Asia is kind of like the same kind of playbook that we have in China. Vietnam is the first market that we explored and already landed in Vietnam since late last year. We are building a very much of an ecosystem solution as well in Vietnam, akin to what we have in China. Southeast Asia growth opportunity, obviously, we're looking at mostly the top few, which is Vietnam, Indonesia, and Philippines, because these are the most populous countries, 100 million population each, plus, and also very young demographic, average age of 29 years old, which is exactly the sweet spot for us in terms of business model. The insurance density and penetration is still very low in Southeast Asia. Vietnam, why we chose Vietnam as the first step is it's now breaking the $5,000 U.S. GDP per capita mark. What that means is that from the OECD countries' experience, insurance penetration is very much going to take a very leapfrog in improving penetration quickly in the next 10 years. This is the golden age of insurance for Southeast Asia. Our current focus right now is the growth markets. We will do a combination of M&A and joint venture in these markets. I talked about Vietnam. This is what we've been doing in Vietnam. We've acquired a 75% stake in Global Care, which is a leading InsurTech player in the local market. We've empowered the business with all our Chinese technology and product and solutions from China. We have been seeing a very robust growth in the past few quarters. This is still a very much early stage expansion, but we see that there's a huge potential in terms of both the country itself attracting a lot of FDI inflows, particularly from the U.S., NVIDIA setting up an AI center in Vietnam due to the talent supply in Vietnam as well. GDP growth next 10 years likely to be the high single-digit CAGR per year. Disposable income, rising deal costs, these are all the same stories that we've been seeing in China for the last 15 years. We're very confident that Vietnam is a very attractive market position for us to enter and bring value to shareholders. I'm going to stop here. I think in terms of investment highlights, we are a leading InsurTech platform. We are a true and, you know, AI-driven, data-driven InsurTech solution provider to the market. We have a sizable customer base, which is still relatively untapped in terms of other cross-selling opportunities, not just in insurance. For example, in wealth management, I think we are just starting this question service. We have very much a customized product offering. We have a very attractive market opportunity both in China as well as Southeast Asia. We are very healthy in terms of our cash position. We have almost $30 million of cash, $30 million of cash, which actually is even larger than our market cap right now. Right now it's around, you know, call it $30 million of market cap, which is just cash value on the balance sheet. We are covered by a few brokers. Citi is our IPO banker, and they're still covering our research. CICC as well is a Chinese investment bank, and then UOB is a Southeast Asian broker based out of Singapore. With that, I'm just going to stop here, and I would like to take any questions from the floor if there's any. Great, thank you, Ron. We appreciate the overview there. We can open the floor for Q&A. As a reminder, if you have a question, feel free to type it in the Q&A tab below. Why don't we start with your position in the market, just talking about your competitive position. Are you able to quantify what your market share is, I guess, by written premiums or written policies? Sure. I think we are a top five player in China, right? The top two or top three actually are the big conglomerates, you know, the likes of Tencent and Ant Financial. Those are the big names. As an independent player, we are probably the number one player, and our market share is around single- digit, like call it 4%-5% in China. The China market is still very fragmented. In terms of market share, you know, that's where we are right now. Got it. Turning to distribution, can you talk about the revenue profile of your business, just I guess both on the D2C and B2B partnership side? Sure. Our total revenue is around $170 million last year, right? Our revenue stream is very straightforward. It's just commission revenue from the insurers. Whatever policy that we distribute on the platform, we take a cut from the insurer, which is the insurance commission, distribution commission. The take rate or the commission rate is, on average, around 30%- 40% on the China side, and in Hong Kong, it's a bit higher, and Vietnam as well. Blended, call it a 30% take rate. The revenue is mostly just commission revenue from the insurers. In terms of makeup of the revenue streams, from the direct-to-C, and B2B2C and the B2A2C, it's roughly a 20% direct-to-C. The balance at 80% is roughly equally split between the B2B2C and B2A2C. A very much diversified revenue stream from the three channels that we have. This slide, yeah. Got it. That's helpful. On the B2B side, is that like a negotiated process or how do you determine those commission rates? Right. Commission rates are always going to be determined by the insurance provider, so with the insurance companies, right, on the product. When we split revenues with the partnerships, then I think it's a combination of the relative bargaining power. For some of the channels with large volumes, obviously they can ask for a higher split. For some of the smaller channels, we can take a higher cut from them. On average, we pay away roughly around 80% of the commissions to the partnerships, right, because we are a platform provider to them. For the B2A2C, it's roughly around the same, 80%- 85% pay away to the agents. Got it. That makes sense. How can we kind of think about customer acquisition? I mean, it seems like on the D2C side, you mentioned any agent can kind of join the platform there. Is customer acquisition pretty low in that sense, or how do we kind of think about that? Direct to consumer, what we do is we create a lot of content on social media channels, educational content. Sometimes it's more like a lifestyle kind of scenario. We create a short video with the parent, you know, unfortunately, catching an illness or getting into an accident. We use these stories to bring out the insurance concept to the customers. We publish this content on multiple channels, like I mentioned, Red Note, which is the Instagram of China. I also mentioned WeChat, which is the WhatsApp, and, you know, live streaming sessions. We also provide live streaming content to the market. All these are lead generation channels that we do on the D2C side. Understood. That's helpful. We have a question here, a couple of questions here. One is on your financial performance. I think you're profitable on a full-year basis. I think it was back in 2023, you know, positive EPS there. Can you discuss your recent financial performance as far as, you know, when you expect to be, you know, fully profitable, I guess just profitability outlook in general? I think right now, to be frank, our profitability level is not that high, but we have been profitable for the past few years, actually, although the absolute quantum is not that big. What we're trying to do is we're still investing a lot in the technology of the business. You can see on our P&L, the R&D expense is still quite material. What we're trying to do is that right now, I think, of course, we're very focused on profitability, and we are profitable, you know, on a quality basis. Sometimes we run into loss-making quarters, but I think we want to maintain that investment into our business. We do believe that, over time, in the next two or three years, when we increase our scale of the business, the operating leverage is going to show, and then profitability is going to be a result of that. I think we'll likely be targeting the 10% net margin mark over the next three years. On a quarter-to-quarter basis, we can be profitable anytime, actually, if we wanted to just spend less on the investment on the AI side. I just got a question from the audience as well. I'm just going to read out live here, which is exactly what you just asked, the path to profitability and how that aligns with the current market cap. Obviously, I think the market cap is not too reflective of our fundamentals, albeit we have a low earning space, but I think that, from many metrics, I think it's still relatively undervalued. That obviously, from the company's perspective, we like to think it's undervalued, trading at, you know, open three times book, and basically less than our cash value on the balance sheet. I think I'd like to spend more time and obviously with this participation this time, to reach out to the U.S. market and investor base more directly, and hopefully, that will address the market dislocation on the valuation. The other question I got from the audience is how long does it take to actually collect commission revenue after policy is sold? Typically, we get the revenue one month after. There's a cooling-off period when the insurance customer buys the policy. When the cooling-off period is over, then the insurer themselves can also recognize the revenue, then we can recognize our commission. Typically, it's about one month after the policy is sold. I just got these two questions on my side. I'm not sure if Brendan, you have any others that you want to raise to me? Yeah, absolutely. A couple more questions here. Why don't we talk about sales by product? You know, maybe what product types, you know, sell the most on the platform? Maybe just talk about your growth outlook, looking at specific products. Sure. I think right now, we on this page, we can see the main product categories that we sell. In the China market these days, I think that people are spending a lot of money in the long-term savings products. What we'll be referring to here would be the participating whole life insurance or endowment products. Basically, it's a wealth accumulation product. The reason for that is the declining interest rate environment in China. I'm not too sure whether the U.S. audience is aware, but Chinese 10-year bond yield is around 1.6% right now, which is much lower than the U.S. What that means is that the low yield environment is creating a lot of reallocation of wealth from bank deposits or other products into insurance, because of the long-term yield potential. That's also driving a lot of wealth outflow from China into, obviously, Hong Kong is the catchment for the country. Hong Kong is benefiting from a lot of this outflow of wealth from China, from the mass affluent market, to basically get a better yield elsewhere. Hong Kong is the international market. It's the international financial center for the world, one of three main markets. Hong Kong is U.S. dollar free convertibility. A lot of the money that is RMB coming from China is being converted into U.S. dollars and to invest in product that's provided by the Prudentials and the Manulife, the AIAs, where the investment can be global equities, global fixed income. I think that's the trend. In China, we also sell health products. A lot of these are critical illness products that we partner and co-develop exclusively with our insurance partners. We also sell long-term medical insurance. This would be your hospitalization benefits. We have been partnering with Ping An Insurance, which is the top insurance company in China, to launch an exclusive product on our platform. Health products and savings products are the main products that we distribute. Great. That's very helpful. One last question for me just on, you know, maybe from the perspective of a U.S.-based investor, are there any key, you know, regulatory hurdles with the company operating in China or any, you know, notable differences with the Chinese insurance market that, you know, a U.S.-based investor should be aware of? I think in terms of regulatory perspective, China is actually, in some way, even stricter than the U.S. market. The regulator has been very much detailed, out all the relevant regulations surrounding online or digital insurance distribution. There's actually a document that lays out all the rules for people to operate in this space. I think regulatory clarity is there in China, and that's such a good thing. It's only been the last two years where all these regulations have been kind of like done and dusted. We have been in a transitioning mode in the likes of 2022, 2023. I think for the last year and two years window, everyone has settled, and all the relevant regulations have come out. I don't think there's any more surprises down the road. I think what the Chinese companies have been hurt in the U.S. market is a lot of the regulatory and clarity, or lack thereof of regulatory clarity, over the last few years, which has resulted in dislocations and investor losses. I think that for our InsurTech space in China, I don't expect any surprises down the road anymore. Great. Ron, we'll conclude there. We really appreciate the overview. A really interesting story, especially from the valuation perspective. Thank you, everybody, for joining us. Thank you, Brendan, and thanks for having me. I hope everyone has a good day. Likewise. Thanks, everybody. Take care. Bye.