The company's recent situation
Sunshine Insurance completed the full circulation of H shares on January 12, 2024, and the converted shares were listed and traded on the Stock Exchange on January 15. Currently, the company's latest shares in circulation have reached 3.48 billion shares, accounting for 30.25% of the total number of issued shares.
reviews
The liquidity of Hong Kong stocks will improve after full circulation, and market attention is expected to increase. Sunshine Insurance completed the conversion of 2.33 billion domestic shares to H shares on January 12, 2024, and the converted shares were listed and traded on the Stock Exchange on January 15. Since Sunshine Insurance was listed in December 2022, due to few shares in circulation and low market attention, transactions have been relatively lackluster in the past year. The stock price trend did not fully reflect fundamental changes such as the increase in life insurance NBV and the improvement of financial insurance CoR. After this conversion, the company's tradable shares reached 3.48 billion shares, accounting for 30.25% of the total issued shares. Liquidity has improved markedly. We believe that the company's market attention and transaction activity are expected to increase.
The company has advantages in strategy implementation and execution, and is expected to show good growth in the new life insurance cycle. Sunshine is a medium-sized private insurance group. We believe that its advantages in implementing business strategies over a long period of time are expected to expand in the new cycle of high-quality transformation of the industry. The company's 1H23 performance is impressive, reflecting its good debt-side growth elasticity. We expect the growth rate for the full year of 2023 to slow down from the first half of the year: Sunshine Life 1H23's new business value will lead the industry by +37% year-on-year. Considering disruptive factors such as the suspension of sales of 3.5% pricing products and the integration of banking insurance channels in the second half of the year, we expect Sunshine Life's annual NBV growth rate to slow down from the first half of the year; under the old guidelines, CoR is 98.2% and 98.5%, respectively. We expect the annual NBV growth rate to slow down from the first half of the year; under the old guidelines, CoR is 98.2% and 98.5%, respectively. insurance The overall profitability of the business is expected to improve further throughout the year.
Increased liquidity is expected to improve valuation discounts. It is recommended to focus on changes in asset-side sentiment to find investment opportunities.
We expect that as the company's liquidity improves, its stock price will better reflect the fundamental situation. Furthermore, we believe that under the influence of economic recovery expectations and capital market fluctuations, China's life insurance industry is being systematically undervalued. We recommend focusing on changes in asset-side expectations to find investment opportunities.
Profit forecasting and valuation
We maintain our profit forecast, outperforming industry rating, and target price of HK$5.8, corresponding to 2023e/24e0.5x/0.5x P/EV. The company is currently trading at 2023e/24e 0.4x/0.4x P/EV, with 27% upside.
risks
The increase in premiums for new orders fell short of expectations; long-term interest rates fell sharply; capital markets fluctuated greatly; and policy and regulatory uncertainty.