Event: on July 19, 2017, Tianmao Group released its semi-annual report for 2017. In the first half of 2017, Tianmao Group's total assets were 129.91 billion, up 10.2% from the same period last year, and its operating income was 38.22 billion, up 559.6% from the same period last year, deducting 624 million of its non-return net profit, up 80.5% from the same period last year.

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The original premium income increased significantly compared with the same period last year, and the performance in the first half of the year was brilliant. In the first half of 2017, the company achieved operating income of 38.22 billion yuan, 559.6% of the same period last year, mainly due to the consolidated statements in March last year and the high growth of Guohua life insurance premium income in the first half of this year. On March 16 last year, the company included Guohua Life in the consolidated statement, and its operating income only included Guohua Life's operating income data from March 16 to June 30. In the first half of this year, Guohua Life Insurance realized the original premium income of 34.3 billion yuan, an increase of 68% over the same period last year, achieving rapid premium growth.

The net profit of deducting non-return has improved significantly. In the first half of 2017, the company achieved a net profit of 626 million, down 24.6% from the same period last year, mainly due to an one-time profit and loss of 480 million in the first half of 2016. after deducting non-recurrent profits and losses, the net profit was 624 million, an increase of 80.5% over the same period last year. It is mainly due to the reduction of the reserve provision pressure caused by the reduction of the liability cost of the insurance business and the rise and stabilization of the interest rate curve. Guohua Life made a net profit of 1.27 billion in the first half of the year.

Judge the hour and size up the situation, vigorously reduce the business of medium-and short-term products and universal insurance products, and take the transformation road of "optimization and growth". Guohua Life Insurance has relied on "asset-driven liabilities" since 2013.

The model has achieved rapid expansion. Since March last year, the CIRC has gradually stepped up its supervision of medium-and short-term products. The company size up the situation, adjust the product structure in time, greatly reduce the short and medium duration and the sales of universal insurance products, and take the transformation and development road of "optimization and growth".

In the first half of 2017, the company achieved a total scale premium of 35.9 billion yuan, of which long-term savings and risk protection business accounted for more than 70%, medium-and short-term business accounted for less than 30%, medium-and short-term business was far lower than the regulatory limit, and the business structure continued to be optimized. In the first half of the year, the original insurance premium income reached 34.26 billion yuan, an increase of 68.3% over the same period last year, accounting for 95% of the scale premium.

Bank channel is still the core channel, gradually cultivate the development of marketing channel. The bank channel is still the company's core sales channel, and the original premium increased by 72% in the first half of 2017 compared with the same period last year. While developing the bancassurance channel, the company attaches importance to the cultivation of the marketer channel, and the salesman channel achieved a cumulative premium of 480 million yuan in the first half of the year, 31% of the same period last year.

Investment capacity is still strong, basically the same as the same period last year, lower than the annual level.

In the first half of 2017, Guohua Life achieved a total investment income of 3.62 billion yuan, an increase of 22% over the same period last year, and the annualized total investment return was 7.05%, which was basically the same as that of the same period last year and lower than 8.86% for the whole of last year. The company's high investment rate of return mainly depends on the company's more aggressive investment structure. This year, it actively adjusted its investment strategy and appropriately reduced the investment proportion of assets such as stocks and bonds according to market reasons and macroeconomic factors in the first half of the year. Trust investment accounted for 23%, an increase of 12 percentage points over the beginning of the year, and time deposits accounted for 8%. An increase of 3 percentage points over the beginning of the year.

Comprehensive solvency is close to the regulatory red line, and the increase is expected to be approved this year. As of June 30, 2017, the company's comprehensive solvency adequacy ratio was 118.51%, down 10.7 percentage points from the beginning of the year, approaching the 100% regulatory red line, which has become an important factor affecting the company's business development and investment.

The company's application for a non-public offering of no more than 4.845 billion shares will all be used for the replenishment of Guohua Life Capital. It was examined and approved by the CSRC on March 29, 2017, and is currently awaiting the written approval document of the CSRC. The specific approval time depends on the internal process of the CSRC and is expected to be approved by the end of the year.

Investment advice: Tianmao Group is currently the smallest life insurance target by market capitalization. It is optimistic about the company's industrial opportunities and transformational development, and maintains "buying".