The core driving force of premium growth has been confirmed twice, and optimism is that profit targets will lead to an improvement trend in the overall cost ratio. In January-August, the company achieved premium revenue of 20.702 billion yuan, up 32.3% year on year, ranking first among listed insurers; in August, the monthly premium yoy was +9.2% (26.1 pct decrease in growth rate), which is expected to be the result of the company optimizing its business structure, balancing business growth and underwriting profits. Under an optimal structure and cost control trend, the 23H1 comprehensive cost ratio dropped 0.7 pct to 95.8% year-on-year, achieving an underwriting profit of 536 million yuan.
From a product point of view, 23H1 Health Ecology's premium revenue was yoy +15.9% to 5.018 billion yuan, and the premium yoy for the “Exclusive e-Life” series of the “Exclusive e-Life” series, which is in stark contrast to the weak sales of traditional insurance companies' insurance products. We believe that short-term health insurance and medical insurance have multiple advantages such as high customer demand matching, low price, simple form, and sustainable cash flow contribution. They are highly adaptable to Internet sales channels, and differ from leading companies' personal insurance product types. In addition, they are expected to continue to contribute to increased performance in the business transformation of security products from sales orientation to customer demand.
Technological innovation is driving improvements on the demand side, and the technology business is expected to enter the fast track of development. 23H1 technology output revenue was yoy +22.0% to 267 million yuan; of these, domestic technology revenue was yoy +35.5%, and R&D investment was yoy +6.5% to 699 million yuan. The technology business is expected to form a collaboration with the insurance industry, grasp customer needs based on actual business experience, and continue to improve the rich product shelves. Customer stickiness and coverage are expected to increase, helping to boost revenue.
The investment side is improving marginally. Recently, long-term interest rates have shown a steady upward trend. As of September 22, the yield to maturity of 10-year treasury bonds was 2.68%, up 13.73 bps from the low point during the year (August 21). At the same time, we believe there is still room for the “active capital market” policy bullet bag, and the equity market performance in the next stage is worth looking forward to.
Investment suggestions: The company is the only target of the dual attributes of insurance and technology. Significant improvements on the debt side and investment side will drive H1 profit correction in both directions. The growth of the core business is expected to continue to be verified. The company has both fundamental improvement+technology concept+private enterprise bonuses to maintain a “buy” rating.
Risk warning: market fluctuation risk, interest rate risk, policy risk.