This report is read as follows:
Company property life insurance balanced development, the core to meet the family security services and corporate risk management needs; adhere to the customer-based life insurance reform, NBV growth is expected to be sustainable, the first coverage to increase the rating.
Summary:
For the first time, it is given an "overweight" rating, with a target price of HK $5.78 per share, corresponding to 0.61 times P/EV in 2023. We expect that the company's insistence on customer-based life insurance reform will promote the sustainable growth of the company's NBV, thanks to the life insurance reform starting from customer needs, matching differentiated customer needs through hierarchical management at the channel end, and establishing four major service systems at the product service side to deeply address the four core needs of customers. The company's NBV growth rate is expected to be 20.4%, 5.3% and 11.9% respectively from 2023 to 2025. Under the new accounting standards, the estimated return net profit of the company from 2023 to 2025 is RMB 51.84 billion, respectively, and the corresponding EPS is RMB 0.45, 0.54 and 0.62 respectively.
Balanced development of property and life insurance, the core to meet the needs of family security services and enterprise risk management.
Sunshine Insurance is a leading comprehensive insurance group company in China, with the core to meet the needs of family security services and enterprise risk management. 1) Life insurance is the main source of income and profit of the group, and the growth of new business value shows resilience, mainly for the company to take the initiative to optimize the business structure and increase the proportion of long-term insurance payment business, which leads to the stabilization and recovery of new business value rate; the proportion of traditional life insurance continues to increase under the background of customer savings demand growth, while new orders decline under the influence of the shrinking scale of bulk delivery business. 2) the adjustment of property insurance business structure leads to the fluctuation of premium growth and the trend of underwriting profit level. In property insurance, car insurance is the main source of premium contribution, while the proportion of guarantee insurance in non-car insurance continues to decline, while that of Italian health insurance has increased. Thanks to the increase in the proportion of direct sales channels and the pressure on the cost level, the profitability of property insurance underwriting tends to improve, but the comprehensive cost rate is still on the high side compared with the listed industry.
Adhere to the customer-based life insurance reform, NBV growth is expected to be sustainable. The company adheres to the life insurance reform based on customer management and launches a "vertical and horizontal" protection plan to provide comprehensive solutions for family customers. In terms of channels, we should strengthen the hierarchical operation of the team, fine management of all levels of teams, and provide agents with the ability to meet the four major needs of customers, so as to promote the steady increase of per capita production capacity; in terms of production and service, starting with the strategic plan of "vertical and horizontal partners", provide four major product service systems to meet the multi-dimensional service needs of customers' families throughout the life cycle. In addition to the basic insurance products, the company combines the medical service model of "own hospital + specialist hospital + terminal organization", as well as the synchronous layout of pension community and home care to meet the needs of customers' medical care services.
Catalyst: the demand for customer savings continues to be strong.
Risk hint: the product is difficult to meet customer demand; the pressure drop of car insurance costs is more difficult; the interest rate is down.