Core ideas:
The company released three quarterly results: the cumulative net profit in the first three quarters was 81.6 billion yuan,-20.8% compared with the same period last year, and 118.7 billion yuan in OPAT, + 9.2% in the same period last year, and-17.8% in the same period last year.
Residents' defensive savings led to poor sales of consumer-oriented high-margin products such as serious illness insurance, which led to a decline in the "volume and price" of NBV. The cumulative year-on-year growth rate of NBV in the first three quarters was-17.8%. The year-on-year growth rate of Q3 in the first three quarters was 15.4%, respectively, 42.3% and 33.5% respectively. Quantity: FYP year-on-year-4.5% year-on-year growth rate of 23.1% Q1GQ Q2GQ Q3 in the single quarter respectively. The high base laid by a good start gradually declined as the sales of serious disease insurance products were not as expected. The pressure on new order sales led to a decline in agent income, difficulties in recruitment and loss, agent size of 706000, month-on-month / mid-year growth rate of-31.1% and 19.6% compared with the beginning of the year / the middle of the year. Price: NBVM year-on-year-5pct to 30.7% is mainly due to the increase in the proportion of annuity insurance, and the sharp decline in guaranteed products with high profit margins has led to changes in product structure. Looking forward to the whole year, the base decline (20Q4 actively prepares for a good start to 21 years) and the superimposed manpower stabilizes, and the decline is expected to be narrower than that of Q2/Q3, and the year-on-year growth rate is expected to be about 15%.
Asset-side risk events are released slowly, which is better than market expectations. The net profit of homing in the first three quarters was-20.8% compared with the same period last year, and the company did not further increase the impairment loss of Huaxia Happiness, mainly because Huaxia Happiness's debt restructuring plan was better than market expectations. It is expected that with the implementation of the plan, the previously calculated impairment loss is expected to return to the profit statement. Home OPAT year-on-year + 9.2%, life insurance OPAT-2.8% year-on-year.
The property insurance underwriting side ushered in the inflection point. In the first three quarters, the total premiums were-9.2% compared with the same period last year, of which the year-on-year growth rates of auto insurance and non-auto insurance were-7.9% and 21% respectively. With the decline of the average premium base for cars, auto insurance premiums are expected to achieve positive year-on-year growth. COR year-on-year-1.8pct to 97.3%, in the context of the Q3 Zhengzhou flood, the improvement slightly exceeded market expectations, which is expected to be mainly driven by the loss reduction of the letter insurance business in non-car insurance.
Profit forecast and investment advice: the company's EPS for 21-23 years is expected to be 6-9-12 yuan. The EV valuation method gives the company a-share 1XPEV valuation (H-share 1XPEV) in 2021, corresponding to a reasonable valuation of A-share (HK $88.4 per share), maintaining the company's A-share "buy" rating.
Risk tips. Life insurance reform fell short of expectations and long-end interest rates fell.