The 2023 value is in line with year-on-year expectations. The revised return on investment assumes that the return on investment will drag down EVs. The 2023 NBV is 31.08 billion yuan. The 2023 NBV is 31.08 billion yuan. Comparable caliber estimates are +36.2% year over year, in line with our expectations. The Group's operating profit to parent was 117.99 billion yuan, or -19.7% year over year, including life insurance -3.2%, bank +2.1%, financial insurance -11.4%, asset management loss conversion, technology -65.1%; net profit to mother was 85.66 billion yuan, -22.8% YoY, mainly dragged down by the asset management sector. The annual dividend was 2.43 yuan/share, and the cash dividend accounted for 37.3% of operating profit, +7.8pct year on year. The current dividend rate (TTM) is 5.76%. The company's value continued to grow well in 2023. We forecast the 2024-2026 NBV +7.2%/+12.0%/+10.1%, corresponding to the Group EV +4.3%/+3.9%/+1.0% YoY; considering the downward trend in long-term interest rates, we lowered the Group's 2024-2025 net profit forecast of 1202/1383 (previous value was 1755/191 billion yuan), and added the 2026 net profit forecast of 1601 billion yuan, corresponding EPS to 6.6/7.6/8.8 yuan. The company is a leader in the insurance industry. The main life insurance business is growing steadily, and it has built a deep moat with comprehensive financial advantages and healthcare. The current stock price is 0.6/0.5/0.5 times the 2024-2026 PEV, respectively, maintaining a “buy” rating.
Value remained high throughout the year, and individual insurance transformation continued to deepen. Banking insurance value continued to rise high (1) Based on macroeconomic environment and long-term interest rate trend considerations, the company lowered the EV long-term return by 50 bps to 4.5% in 2023, and lowered the risk discount rate by 150 bps to 9.5%. At the end of 2023, the group/life insurance EV ratio was -2.4%/-5.0%, and the group/life insurance EV gap under the old and new caliber was -6.7%/-10.7%. The new premium for NBV calculation in 2023 was 165.78 billion yuan, +38.9% year-on-year, and the new-caliber NBV/margin was 31.08 billion yuan/18.7%, respectively. According to comparable estimates, margin decreased by 0.5pct to 23.7%, corresponding to NBV +36.2% YoY. (2) Individual insurance channels: At the end of 2023, the number of agents dropped to 347,000, compared to -22% at the beginning of the year. The NBV of individual insurance agent channels in 2023 was +40.3% year over year, NBV per capita was +89.5% year over year, and team production capacity and quality improved; (3) Banking insurance channels continued to increase in value. The NBV in 2023 was 3.64 billion yuan, +77.7% year over year. The banking insurance channel continued to deepen the independent agent model. (3) Community grid and others: At the end of 2023, the number of operating commissioners in the grid model exceeded 15,000, and the 13-month policy continuation rate was +5.4pct year over year (overall policy continuation rate +2.5pct year over year). According to “Insurance+Service,” home pension has covered 54 cities across the country, and over 80,000 people have been eligible.
The increase in financial insurance COR was affected by guaranteed insurance and natural disasters, creating a unique “insurance+service” moat (1) Financial insurance service revenue of 313.5 billion yuan in 2023, +6.5% year over year. Affected by increased travel rates, natural disasters, and guaranteed insurance business (98.4% after exclusion), the comprehensive cost ratio increased 1.1 pct to 100.7% year over year. Vehicle insurance service revenue was +6.1% year-on-year, and the comprehensive cost ratio increased by 1.1 pct to 97.7%, and 96.6% after excluding the impact of natural disasters. (3) The annualized net return on investment of insurance funds was 4.2%, down 0.5 pct year on year, and the annualized comprehensive return on investment was 3.6%, up 0.9 pct year on year. (3) From a comprehensive financial perspective, the number of the company's individual customers increased by 2.2% over the beginning of the year to over 230 million, and the average number of customer contracts was 2.95. (4) The healthcare ecosystem continues to improve, with an average customer contract of 3.37 and an average customer AUM of 55,900 yuan, contributing more than 73% to life insurance NBV.
Risk warning: Long-term interest rates fell more than expected; life insurance reform progressed more slowly than expected.