可比口径下，寿险NBV 同比增长44%，考虑到1H23 同比增速为37%，我们估计2H23 同比有可能达到57%左右。公司2023 年新单保费（FYP） 同比下降4.6%，显示NBV 利润率有大幅改善。我们估计2023 年FYP 基准的NBV 利润率为10.8% （2022 可比口径7.2%）。一方面该公司在2023年大幅度压缩低利润率的银保趸交业务规模，另一方面银保业务报行合一监管要求也有助于改善银保业务的利润率。公司分别调降了EV 投资收益/折现率假设50bps/150bps 至4.5%/9.5%，调整比率为1：3，与中国平安保持一致。调整后NBV 下降了大约17%。我们预计2024 年NBV 增长9.2%。Keep DPS unchanged
Sunshine Insurance announced its 2023 results on March 25. EPS is down 25% year-on-year in comparable caliber of RMB0.32, which is also lower than our expectations of RMB0.57. However, the company maintained DPS at RMB0.18 (2022: RMB0.18), showing the importance it attaches to shareholder returns. The new life insurance business value (NBV) increased by 44.2% year on year under a comparable caliber, and the 2H23 growth rate increased, and the growth momentum is strong. The company lowered its implied value (EV) assumption, and the adjusted NBV was still 19% higher than the figure reported last year. The comprehensive cost ratio (COR) for property insurance was 98.7%, an improvement of 0.7 pct over the previous year. Considering investment fluctuations, we downgraded 2024/2025/2026 EPS to RMB0.38/0.42/0.47 (previous value: RMB0.62/0.67/-) and lowered the target price based on the DCF method to HKD4.6 (previous value: HKD6.6), maintaining a “buy” rating.
Life insurance NBV profit margin improved significantly
On a comparable scale, life insurance NBV increased 44% year over year. Considering 1H23's year-on-year growth rate of 37%, we estimate that 2H23 is likely to reach around 57% year over year. The company's 2023 New Policy Premium (FYP) fell 4.6% year over year, indicating a significant improvement in NBV profit margins. We estimate the 2023 FYP benchmark NBV margin of 10.8% (2022 comparable caliber 7.2%). On the one hand, the company will drastically reduce the scale of the banking insurance business with low profit margins in 2023. On the other hand, the integrated banking insurance business reporting and regulatory requirements will also help improve the profit margin of the banking insurance business. The company reduced the EV investment benefit/discount rate, respectively, assuming 50bps/ 150bps to 4.5%/9.5%, and the adjustment ratio was 1:3. in line with Ping An of China. Adjusted NBV declined by approximately 17%. We expect the NBV to grow 9.2% in 2024.
Improved performance of industrial insurance underwriting
Under a comparable caliber, COR 98.7% of industrial insurance decreased by 0.7 pct year over year. Although the loss rate worsened by 1.3 pct year over year, the cost ratio improved by 2.0 pct year over year, covering the increase in loss rate. The car insurance line had a COR of 98.9% in 2023, which was weaker than the 98.6% performance of non-car insurance. Among non-auto insurances, eHealth Insurance's COR is 92.3%, with excellent performance, and is the largest source of underwriting profit; credit guarantee insurance COR 98.8% also covers profits; however, liability insurance, freight insurance, and other business COR failed to achieve underwriting profits. In 2023, the overall production insurance premiums increased by 10%, with car insurance premiums increasing by 6% and non-car insurance by 15%. We expect a 9% increase in production insurance premiums in 2024, with a COR of 98.8%.
The balance sheet is sound
By the end of 2023, Sunshine Insurance Group's core solvency was 152% (life insurance/industrial insurance: 115%/166%), with sufficient solvency. The company's 2023 ROE was 6.2%, down from the previous year. We expect the 2024 ROE to be 7.6%. The current implicit valuation of the company's stock price is 028x 2024PEV, which we think is attractive.
Risk warning: Life insurance NBV growth deteriorated sharply, industrial insurance COR deteriorated drastically, and investment losses were significant.
