Sunshine Insurance is a comprehensive private insurance group that is growing rapidly and has a comprehensive layout. In 2004, the founder, Mr. Zhang Weigong, left the former Insurance Regulatory Commission to start a business, and Sunshine Insurance Hong Kong Stock Exchange was listed in 2022. The Group has a comprehensive layout in the fields of life insurance, industrial insurance, asset management, healthcare, etc. Among them, Sunshine Life ranked 12th in market share and Sunshine Financial Insurance ranked 7th (based on original premium income in 2020). The company actively uses cross-marketing methods between life insurance, car insurance and non-car insurance to further explore customer value and exert synergy to promote premium growth.
At the same time, investment in technology has surpassed the industry level, and digital transformation has empowered the main business.
Sunshine Life: Driven by banking insurance, the NBV growth rate is leading the industry. Unlike other listed personal insurance companies, Sunshine Life mainly uses banking insurance channels. The differentiated channel structure fosters misplaced competition and provides a safety cushion for performance in the agent reform process. However, at the same time, the structure centered on banking insurance channels has caused its overall new business value rate to be low. The agent channel has good ability to sell guaranteed products, and health insurance accounts for 40% +. Overall, Sunshine Life's share of traditional insurance continues to rise, crowding out dividend insurance space. Health insurance showed a slight decline in the share of health insurance due to changes in the channel structure, but it remained significantly above 10%. With a diversified layout, Sunshine Life actively integrates Group resources to build an “insurance+service” ecosystem, which is expected to create a second growth curve for the company.
Sunshine Financial Insurance: Steady, moderate and positive, marginal improvement in profitability. 2023H1, Sunshine Financial Insurance achieved premiums of RMB 21.929 billion, +5.1% over the same period last year. Since the company is still growing, COR has fluctuated greatly. It has recently been optimized, and underwriting profits have been achieved since 2022. In terms of car insurance, the growth rate is converging with industry trends. Intelligent life meters improve pricing capabilities, help COR improve, and are expected to become the core competitiveness of the company's car insurance. The growth rate of non-car insurance has fluctuated greatly, mainly affected by guarantee insurance. Yijian Insurance's compensation contributes mainly to the growth rate, and its importance continues to increase. As the risk of non-car insurance types themselves is clarified and the structure is optimized, the non-car insurance COR has improved. At the same time, the company is committed to applying the smart life watch experience to non-car insurance, and is expected to become an important driver for financial insurance in the future.
Sunshine Asset Management: Investment is steady, and the scale of third-party assets continues to expand. The total investment assets of 2019-2023H1 have maintained a high increase, and the third-party business has also expanded rapidly. 2023H1 accounts for 48.9% of Sunshine Asset Management's fiduciary management funds, +17.7 pcts compared to 2019. Although the return on net investment continues to decline, the return on total investment remains at an excellent level among peers, demonstrating the company's ability to actively manage assets. In terms of asset allocation, fixed income is the main focus, and equity assets are increased, so the risk exposure to investment real estate is relatively manageable.
Investment advice: As a comprehensive insurance group, Sunshine Insurance's entrepreneurial genes and private attributes all give it distinct characteristics as a company during the growth period. Compared with mature listed insurers, it can be expected to grow at a smaller base. We gave Sunshine Insurance the 2023-2025 EPS forecast value of 0.52/0.63/0.74 yuan, and the BPS forecast value was 5.54/6.13/6.70 yuan. We used the segmented valuation method to value Sunshine Insurance, giving 2024 personal insurance business 0.35xPb, property insurance business 0.6xPb, and other business 0.8xPb, corresponding to a target market value of HK$62.709 billion in 2024 (HKD/RMB 0.9088, as of 2023/12/29). The target price was HK$5.45 per share, and the first coverage was given a “Recommended” rating.
Risk warning: changes in regulatory policies, agent transformation falls short of expectations, frequent natural disasters, equity market shocks, long-term interest rates continue to decline