Tianmao Group transforms finance through insurance layout. Since 2015, the company has raised capital through two non-public stock offerings to acquire shares in Guohua Life and AXA Tianping, taking advantage of increased insurance demand to comprehensively develop life insurance and financial insurance. The level of attention paid by Chinese residents to insurance products has gradually increased. In 2004, insurance products accounted for 8% of residents' financial assets, and in 2014 to 10%, and the transformation of residents' wealth structure catalyzed insurance demand; at the same time, China's population aging accelerated. In the five years from 2010 to 2014, the proportion of people aged 65 and above increased by more than or equal to 0.25 percentage points, and in 2014, the proportion of China's population aged 65 and above reached 10%. Over the next 5-10 years, China's aging trend will continue. Changes in population structure have created an immediate need for insurance (WIND data) ). In the future, the company will combine Guohua Life Insurance with Ansheng Tianping to form a development model with finance and insurance as the main business, with chemicals and medical care as the original main business. Guohua Life pushes Tianmao Group to turn a loss into a profit. In February 2016, Tianmao Group completed the acquisition and capital increase of Guohua Life Insurance and achieved a merger, and Tianmao Group's shareholding in Guohua Life increased from 7.14% to 51% (company announcement, same below). (1) Guohua Life Insurance's assets drive liabilities and achieve rapid growth in scale. As a small to medium insurance company, Guohua Life Insurance chose the path of “asset-driven liabilities” and promoted Internet finance. In December 2012, sales of universal insurance products reached 100 million yuan within three days, and in 2015, it joined hands with Alipay to launch the “Internet+Pension” concept. In 2015, Guohua Life achieved investment income of 5.6 billion yuan, an increase of 49% over the previous year, insurance premium income of 23.7 billion yuan, a sharp increase of 572% over the previous year, and premium income ranked 13th among Chinese personal insurance companies. This time, Liu Yiqian increased his holdings in Guohua Life through Tianmao Group, and Guohua Life Insurance is expected to enhance its overall strength through this. (2) Guohua Life helped Tianmao Group turn losses into profits in the first quarter of 2016. According to the company's performance forecast, in the first quarter of 2016, Tianmao Group's net profit attributable to shareholders of listed companies reached 750 to 800 million yuan, turning a loss into a profit. Among them, Guohua Life's net profit attributable to Tianmao Group was about 300 million yuan, accounting for more than 40% of the net profit contribution. AXA balances have a unique competitive advantage in the market. In March 2016, Tianmao Group announced a plan for the non-public offering of A-shares and plans to acquire shares in AXA Tianping. After the acquisition is completed, Tianmao Group's shareholding share in AXA Tianping will reach 50%. (1) AXA Balance is doing well and has achieved a significant increase in net profit. In 2015, AXA Tianping's premium income and investment income were 7.3 billion yuan and 540 million yuan respectively, with year-on-year growth rates of 10% and 52% respectively. In 2015, AXA's net profit exceeded 200 million yuan, nearly 12 times the net profit in 2014, achieving significant growth. (2) AXA Balance has a unique competitive advantage in terms of market position and shareholder resources. In 2015, AXA Tianping's premium income ranked first in the total revenue of foreign-funded financial insurance companies in China, accounting for 41% of revenue, and its market position advantage is obvious; AXA Switzerland, a shareholder of AXA, is a wholly-owned subsidiary of France's leading insurance company in the world. In the future, the company will use shareholder advantages to enhance its competitiveness. The majority shareholder, New Liyi Group, actively lays out financial control. (1) New Liyi Group acquired Changjiang Securities, which is rich in financial control resources. In 2015, Changjiang Securities issued an announcement stating that Xinliyi Group transferred 14.72% of Changjiang Securities held by Haier Investment. The acquisition was completed in early 2016, and Xinliyi Group became the largest shareholder of Changjiang Securities. At the same time, Xinliyi Group controls many enterprises, including Tianmao Group, Lijiaying, 1000 Internet Finance, and Xinliyi Real Estate Investment, and is actively arranging financial control. Xinliyi Group participated in Tianmao Group's non-public offering as a major shareholder. The Group's rich financial control resources and strong capital strength made it possible to anticipate the successful implementation of Tianmao Group's non-public offering. (2) In the future, Tianmao Group may use Xinliyi Group, the majority shareholder, to achieve structural optimization and profit improvement. As a listing platform under Xinliyi Group, Tianmao Group has the possibility of injecting financial assets into Xinliyi Group. In the future, Tianmao Group's insurance sector may develop collaboratively with securities, real estate, and internet finance held by Xinliyi Group to achieve structural optimization and profit improvement. Investment advice: Buy-A investment rating, target price of 11 yuan for 6 months. We expect the company's EPS from 2016 to 2018 to be 0.29 yuan, 0.40 yuan, and 0.50 yuan, respectively. Risk warning: Macroeconomic downturn exceeds expectations, non-public stock offerings fail