Key investment points: The company announced its 2023 results, dividends exceeded expectations, and profits were under pressure. In 2023, the company achieved operating profit/net profit to mother of 1179.9/856.65 billion yuan, yoy -19.7%/-22.8%; 23Q4 operating profit/net profit to mother yoy -75.2%/-110.5%. The company simultaneously reduced the return on investment and risk discount rate. The actuarial assumption was 0.5pct/1.5pct to 4.5%/9.5%. This affected EV by -2.4% to 1.39 trillion yuan compared to the beginning of the year (assuming a negative contribution of 76.604 billion yuan). Under profit pressure, the dividend yoy per share was +0.4% to 2.43 yuan, and the dividend ratio under the operating profit/net profit to mother ratio reached 37.3%/51.4%, corresponding to A/H shares (latest closing price) of 6.0%/8.2%.
NBV performed well, and continued to grow in 23Q4 under the influence of the new regulations. In 2023, the company achieved NBV392.62 (comparable caliber) /310.80 million yuan (assuming adjusted), yoy +36.2% under comparable caliber; new premium yoy +44.6% to 200.94 billion yuan; NBVM reached 23.7% (comparable caliber)/18.7% (assuming adjusted), yoy -0.4%/-5.4%. 23Q4 NBV (comparable caliber) /new yoy +91.5%/+44.1%. It is expected that due mainly to the influence of new regulations to strictly control advance receipts, some Kickoff Reserve businesses will be included in 23 years. 1) Continued high growth in individual insurance channels: NBV/new order/NBVM (first-year premium caliber) yoy +40.3% (comparable caliber)/+59.0%/-4.3pct; team size QOQ -3.6% to 347,000 people, narrowing the decline by 0.1 pct month-on-month; per capita NBV/monthly income/activity rate yoy +89.5%/+39.2% /+2.5pct. 2) The advantages of deep banking insurance cooperation continue to be highlighted: banking insurance channel NBV/new order yoy +77.7%/+79.3%, and NBVMYOY+0.9pct to 20.1%. 3) Community grid channel: The team rose to 15,000 people, and the 13-month insurance policy continuation rate yoy+5.4pct.
Guarantee insurance dragged down financial insurance underwriting losses of $2,083 billion. 2023 financial insurance service revenue/net profit yoy +6.5%/-11.4% to 313.48,89.2 billion yuan, comprehensive cost ratio yoy +1.1 pct to 100.7%, underwriting profit yoy -292.5% to -2,083 billion yuan. 1) Auto insurance: 23-year insurance service revenue yoy +6.1%, comprehensive cost ratio of 97.7%, underwriting profit of 4.732 billion yuan. 2) Non-vehicle and eHealth Insurance: Driven by guarantee insurance and liability insurance, with an underwriting loss of 6.815 billion yuan over 23 years.
Non-car/eHealth insurance service revenue yoy +12.9%/-9.3%, and the COR for liability insurance/health insurance/accident insurance/corporate financial insurance/guarantee insurance was 106.3%/96.0%/97.7%/131.1%, respectively. Guarantee insurance and liability insurance underwriting losses reached 68.34/ 1.373 billion yuan respectively. The company suspended the high-risk financing guarantee insurance business in 23Q4, and the insurance performance is expected to improve.
Investment performance remains under pressure. The company's total/net/comprehensive return on investment in '23 was 3.0%/4.2%/3.6%, yoy+0.6pct/ -0.5pct/ +0.9%, respectively. Compared with the beginning of the year, cash/fixed deposits/debts/equity/long-term equity investments/investment properties accounted for -0.8pct/-1.0pct/+1.7pct/+0.6pct/-0.4pct/+0pct in investment assets at the end of the period.
Investment analysis opinion: Maintain a “buy” rating. Currently, the company's valuation is at a historically low level. We believe that the market overreacts in stages to real estate risks and short-term performance fluctuations. The company's performance is highly resilient and flexible. The high dividend logic is recognized by the market in the next stage, which is expected to attract incremental capital inflows and help boost valuation. Under the new accounting standards, we adjusted our net profit forecast for 24-26 to 1482.80/1762.86/215.791 billion yuan. The current closing price corresponds to 24-26E PEV of 0.51/0.48/0.46 times, maintaining a “buy” rating.
Risk warning: long-term interest rate decline, equity market fluctuations, real estate risk exposure, reforms falling short of expectations.