OPAT is expected to rebound year-on-year in 2024. The growth momentum is mainly due to increased financial insurance profits and narrowing losses in the asset management sector. Ping An's operating profit in 2023 was RMB 118 billion (RMB, same below), down 19.7% year on year. Among them, life insurance, health insurance, financial insurance, and banking combined fell 2.8% year on year. The large decline in OPAT was due to losses in the asset management sector. We expect OPAT to rebound 11% year on year in 2024. Among them, OPAT for life insurance and health insurance business is expected to remain flat year on year, financial insurance underwriting profit is expected to rise significantly year on year, net profit from banking business is expected to maintain steady growth, asset management sector losses are expected to narrow, profit contribution from the technology sector is expected to pick up; operating ROE is expected to remain around 14%.
The value of new business is expected to remain flat year over year in 2024. The company adjusted the implied value actuarial assumption in 2023.
We expect the first-year premium for calculating the value of the new business to drop 6% year over year in 2024, but the value ratio of the new business will increase year over year, and the value of the new business is expected to remain flat year over year in 2024. The implied value growth rate is expected to pick up in 2024, mainly due to the one-time adjustment of the 2023 economic assumptions.
The comprehensive cost ratio of the property insurance business is expected to improve significantly in 2024. Guaranteed insurance underwriting losses in 2022 and 2023 significantly weakened the profitability of the company's financial insurance business. As the company reduced its business scale, the drag on financial guarantee insurance was cleared. We expect the comprehensive cost rate for financial insurance to be 99.2% in 2024, down 1.5 percentage points from 2023.
The ability to pay dividends in the medium term is expected to be guaranteed. The market is concerned that the decline in core solvency ratios will limit the company's ability to pay dividends. We expect the decline in core solvency ratios to be mainly affected by stock market fluctuations and declining bond interest rates. We believe that the company has the advantage of comprehensive finance, and the three core businesses of life insurance, health insurance, financial insurance, and banking are expected to continue to provide stable profit contributions in the medium term.
Maintain a buy rating. We believe that the industry's investment logic has switched from a growth logic to a high dividend based on stable profitability. Based on a net market ratio of 0.9 times in 2024, we lowered our target price from HK$64 to HK$51. The company's dividend ratio is already close to 8%. We are still optimistic about the company's leading competitive advantage in “comprehensive finance+technology”. It is expected that the main performance indicators for 2024 are expected to pick up from a low base in 2023 and maintain the buying rating.