Event: Tianmao Group released its 2016 semi-annual report on August 30, 2016. as Guohua Life Insurance was included in the consolidated statement from March 16, the company's total assets reached 109.92 billion yuan, an increase of 4462.49% over the end of 2015. The operating income in the first half of the year was 5.79 billion yuan, an increase of 1795.24% over the same period last year. The net profit of shareholders belonging to the parent company was 830 million yuan, with EPS of 0.19 yuan.
Comments: the main business has been transformed into insurance business, and the net profit has increased significantly. The company successfully controlled Guohua Life Insurance and was included in the consolidated statement on March 16. the insurance business income in the first half of the year was 5.06 billion yuan, accounting for 87.39% of the total business income. The sharp increase in net profit in the first half of the year is mainly due to Guohua Life's consolidated statement: 1) Guohua Life realized a net profit of 740 million yuan during the period from March 16 to June 30. The net profit is 380 million yuan; 2) the 7.14% equity held by the company was remeasured at fair value, and the difference between its book value and its book value was 480 million yuan recorded in the current profit and loss.
All channels of life insurance have developed in an all-round way, and the business structure has been continuously optimized. Guohua Life Insurance began to vigorously develop long-term delivery protection products. In the first half of the year, the life insurance business achieved a scale premium of 33.771 billion yuan, of which the traditional product scale premium was 19.915 billion yuan, an increase of 90 percent over the same period last year, accounting for 58.6 percent of the life insurance business. The company mainly focuses on bancassurance channels, with rapid development of various channels. In the first half of the year, marketing, bancassurance, direct sales and other channels increased by 98%, 40%, 163% and 1278% respectively compared with the same period last year. We are optimistic about the growth of the company and the value increase brought about by the optimization of business structure.
Guohua Life Insurance has strong investment capacity and leads the industry in the total return on investment. In the first half of 2016, Guohua Life achieved a total investment income of 2.962 billion yuan, down 16.12% from the same period last year, and the total investment return was 7.28%, leading the industry level. The company's high level of investment return mainly depends on the company's more aggressive investment structure, with stocks and funds accounting for 29.46% and time deposits and bonds accounting for 14.77%. The company actively adjusted its investment strategy and appropriately reduced the investment proportion of assets such as stocks and bonds and increased the investment of cash assets and equity assets according to market reasons and macroeconomic factors in the first half of the year.
Investment advice: Tianmao Group gorgeous transformation insurance enterprises, become the smallest market value of life insurance target, optimistic about the company's industry opportunities and transformational development, maintain "buy". It is estimated that the EPS in 2016 will be 0.4 yuan, corresponding to 22 times PE.
Risk hint: downward interest rate, uncertain risk of insurance liability reserve provision.
