Event: the company released its three-quarter 2017 report, with a cumulative operating income of 46.589 billion yuan, an increase of 431.87% over the same period last year, and a net profit of 839 million yuan, down 0.47% and 0.20 yuan per share, down-6.54% from a year earlier.

Comments:

The original premium income maintained an increase, accumulating + 82.1% compared with the same period last year, and + 239.0% year-on-year in a single quarter. In the first three quarters, the company achieved a cumulative premium income of 40.33 billion, an increase of 82.1% over the same period last year, and insurance of 6.068 billion in a single quarter, an increase of 239.0% in a single quarter compared with the same period last year.

The investment income improved, and the net profit deducted from non-return increased significantly compared with the same period last year. In the first three quarters, the company achieved a cumulative net profit of 839 million yuan, down 0.47% from the same period last year, mainly due to the one-time income effect of holding Guohua Life Insurance in the first half of 2016. after deducting 480 million of the one-time profit and loss, the net profit rose 134.51% compared with the same period last year. The main reason is the substantial improvement in investment income, with investment income of 5.404 billion yuan in the first three quarters, an increase of 44.8% over the same period last year, and investment income of 1.937 billion yuan in a single quarter, an increase of 96.3% over the same period last year.

The fixed increase has been approved and is proposed to be used to increase the capital of Guohua Life Insurance to release the vitality of growth.

According to the non-public offering plan, the amount of the non-public offering will not exceed 4.845 billion yuan, which will be used to increase the capital of Guohua Life Insurance after deducting the issuance fee. At the end of the second quarter of 2017, the comprehensive solvency adequacy ratio was 118.51%, which was lower than the red line of key regulatory observation, and became an important factor restricting the company's business development and the use of funds. It is estimated that after the capital increase, Guohua's comprehensive solvency adequacy ratio will rise to about 180%, with sufficient solvency, releasing the vitality of the company's business development and increasing the flexibility in the use of funds.

Investment suggestion: the effect of transformation and upgrading of the company is obvious, the structure of the business side is continuously optimized, the scale is gradually developed, the ability of non-standard configuration on the investment side is excellent, and the "buy" is maintained.

Risk hints: tighter supervision; large fluctuations in the capital market.