[Event] China Taiping released its 2023 mid-year report results: 1) Net profit to parent was HK$5.22 billion, +20.5%; of these, life insurance/domestic financial insurance/overseas financial insurance/reinsurance/asset management were +14.8%/-67.9%/+10.1%/+19.3%/-85.8%, respectively. 2) Taiping Life Insurance's NBV was 3.65 billion yuan, +28.5%; NBV Margin 12.2%, year-on-year -1.3 pct. 3) Taiping Life's EV was HK$254.9 billion, +5.0% from the beginning of the year. 4) Net assets of HK$82 billion, -2.3% compared to the beginning of the year.

Core indicator: The net profit of the life insurance business has rebounded. 1) The performance of insurance services was HK$8.15 billion, -25.5% YoY.

Financial expenses of HK$22.2 billion were underwritten, +49.2% YoY. The contract service margin was HK$217.8 billion, -1.6% compared to the beginning of the year.

2) We believe that the increase in net profit of life insurance is mainly due to the rapid expansion of the scale of traditional life insurance premiums.

Life insurance: New insurance premiums have increased dramatically, and the share of banking insurance channels has increased. 1) The performance of insurance services was HK$7.64 billion, -26.0% YoY. The contract service margin was HK$216.7 billion, +1.4% from the beginning of the year; of these, the contract service margin for new life insurance business contributed 9.4% year-on-year in the first half of the year. 2) Premium increases steadily: Taiping Life Insurance's new policy premiums were +42.4%; of these, individual insurance/banking insurance were +21.8%/82.5%, respectively. In terms of original premiums, individual long-term insurance policies paid HK$13.4 billion in the first year, +23.0% year-on-year; long-term bank insurance paid HK$13.4 billion in the first year, +70.6% year-on-year. The growth rate of prepaid premiums from the banking insurance channel was relatively fast, and the share of premiums paid by the banking insurance channel was +1.4 pct over the same period last year. The product structure has been adjusted and optimized, with a year-on-year ratio of +41.7% for traditional life insurance. We expect this to be related to the popularity of traditional life insurance such as incremental whole life insurance. 3) NBV still outperformed most peers: individual insurance channel NBV of HK$3.28 billion +22.4%; banking channel NBV of HK$4.6 billion, which is basically the same as the same period last year. The NBV Margin for individual insurance/banking insurance channels was +1.3pct/-2.4pct to 18.6%/3.6% year on year, respectively. We believe that with the company focusing on the main line of value growth, it is expected that NBV will continue to grow positively in the second half of the year. 4) Significant increase in human efficiency: the number of agents was 320,000, -18.1% compared to the beginning of the year. The monthly per capita premium payment was +32.8% from the beginning of the year to 18,000 yuan. We believe that the reduction in the number of agents is related to the company's promotion of high-quality development of the business force.

Industrial insurance: Continue to achieve underwritten profits, and the share of non-water insurance has increased. 1) The performance of insurance services was HK$390 million, or -48.6% YoY. The comprehensive cost rate was 97.6%, +2.4 pct over the previous year. 2) Domestic industrial insurance had a profit of HK$190 million in the first half of the year, -67.9% year-on-year. 3) The original premium income for domestic industrial insurance was HK$18.4 billion, +3.1% year-on-year, of which vehicle insurance/water insurance/non-water insurance were -3.7%/-5.3%/+14.1%, respectively. 4) In terms of overseas financial insurance business, Taiping Hong Kong/Taiping Macau insurance service performance was +106%/+14%, respectively. The comprehensive cost rate was 91.7%/68.2%, respectively, -4.3 pct/-7.1 pct year on year.

Investment: The total return on investment increased year-on-year, and equity assets were increased. 1) The scale of investment is growing steadily:

Investment assets amounted to HK$1262.8 billion, +7.5% compared to the beginning of the year. The share of fixed income/equity assets ranged from -0.8 pct/+1.0 pct to 74.8%/18.8%, respectively. 2) Total investment income increased steadily: Total investment income of HK$23.705 billion was achieved in the first half of the year, an increase of 105.9% over the same period last year. The annualized net return on investment was 3.63%, year-on-year -0.31 pct; the annualized total return on investment was 3.89%, the year-on-year +1.91 pct; the annualized comprehensive return on investment was 5.92%, +4.00 pct.

Currently, the stock price corresponds to 2023E PEV only 0.12x. China Taiping insists on implementing a high-quality development strategy and continues to lay out a health ecosystem. We are optimistic about the company's long-term development resilience. We gave the company 0.19 times the 2023EPEV unchanged, corresponding to the target price of HK$11.50, maintaining the “better than market” rating.

Risk warning: 1) Interest rates are trending downward; 2) Premium growth falls short of expectations.