Incident: The company disclosed 2023 results, which were in line with expectations. In '23, the company achieved insurance service revenue of 59.9 billion yuan/yoy +7.5%; net profit to mother of 3.74 billion yuan, -16.8%; included value of 104.06 billion yuan, +6.4% compared with the same period last year under a comparable scale, achieving a total/comprehensive return on investment of 3.3%/4.8%, or -1.6pct/+2.0pct, respectively. The company's DPS in '23 was 0.18 yuan/share, the same as the previous year, with a dividend payment ratio of 55.4%/yoy+13pct, a static dividend rate of 2.47%, and stable dividends.
The company assumes a reduction in the risk discount rate of 150 bps to 9.5%, and the reduction of the return on investment assumes a reduction of 50 bps to 4.5%. The company reviewed the 22-year EV and NBV. The Group EV in '23 was 104.1 billion yuan/yoy +2.8%, and YOY +6.4% under the restated caliber; the NBV was 3.6 billion yuan/yoy +19.2%, and the new-caliber YOY +44.2%. It is assumed that the adjustments will continue to increase confidence in life insurance indicators.
The value of the personal insurance business has increased, and the premium structure has been greatly improved. In '23, the company's life insurance premium income was 74.6 billion yuan/yoy +9.2%; term premium income was 181 billion yuan/yoy +22.7%; NBV 3.6 billion yuan/yoy +44.2%. Individual insurance channels: New insurance premiums of 4.87 billion yuan/yoy +37.2% were achieved in 23 years, with annual premiums of 4.3 billion yuan/yoy +46.5%, and the average monthly manpower of individual insurance was 53,400 thousand/month, -15.5% year-on-year, but the per capita production capacity reached 21,000 yuan/yoy +44.4%, with significant cost reduction and efficiency results. Banking insurance channel: The 23-year banking insurance realized a premium of 13.3 billion yuan/yoy +17.5%, and the share of back-up payments was -13pct, and the premium structure was greatly improved; the per capita production capacity of the banking insurance team was 165,000 yuan/yoy +37.3%. The channel value is prominent. Against the backdrop of integrated reporting and banking, the banking insurance channel value is expected to continue to increase. Business quality: In '23, the company's premium continuation rate was 93.9%/yoy+3.4pct; in January, the insurance policy continuation rate was 86.6%/yoy+8.1pct. The continuation rate increased dramatically, and the business quality continued to improve.
The scale of the financial insurance business grew rapidly, and COR bucked the trend and improved due to business restructuring. In '23, the financial insurance business achieved premium income of 44.2 billion yuan/yoy +9.6%, COR 98.7%/yoy-0.7pct, and achieved underwriting profit of 570 million yuan/yoy+ 340 million yuan. Profitability improved significantly, mainly due to the company actively adjusting its business structure. Auto insurance business: Achieved premium income of 26.1 billion yuan/yoy +6.1%, with NEV insurance premiums growing at a rate of 46.4%, increasing the premium scale to fifth in the industry. Auto insurance COR 98.9%, achieving underwriting profit of 290 million yuan. Non-vehicle business: Achieved premium income of 181 billion yuan/yoy +14.9%, underwriting profit of 290 million yuan, and COR 98.6%, of which Yijian/Warranty/Liability/Freight Insurance COR was 92.3%/98.8%/102.1%/103.6%, respectively. Guaranteed insurance risk exposure continued to shrink, 23 years of premium income of 4.3 billion yuan/yoy -25.8%, non-guaranteed insurance yoy +38.8%, and the business structure continued to improve.
The asset-side scale continued to expand, and net/comprehensive return on investment rebounded. The company's investment assets reached 479.8 billion yuan, +15.5% compared to the end of the previous year, of which fixed income assets accounted for 69%, +2.1pct compared to the end of the previous year; the share base accounted for 12%, compared to -2.8 pct at the end of the previous year. The net/total/comprehensive return on investment was 4.0%/3.3%/4.8%, respectively, and +0.1pct/-1.6pct/+2.0pct, year-on-year, respectively.
Investment advice: Maintain the company's “Highly Recommended” rating. Debt side: The company's individual insurance and banking insurance teams have been continuously optimized, efficiency has been greatly improved, business quality has been steadily improved, and channel transformation results have been shown. As a company with a relatively high share of banking insurance channels, it is expected that it will continue to benefit from the integration of banking insurance channel reporting for 24 years. In terms of property insurance, the increase in the company's pricing capacity drives continuous optimization of COR, and the improvement of the business structure will continue to bring steady underwriting profits to the company. Asset side: The scale of investment is expanding rapidly, and investment returns are expected to continue to improve as the market recovers. Net profit for 24-26 is estimated at RMB 42,46,4.9 billion, with year-on-year growth rates of +13%, +9%, and +6% respectively; NBV of 45, 51,7 billion yuan for 24-26, +24.3%, +13.9%, and +11.1% year-on-year respectively. The current closing price corresponding to 24E-26E dynamic P/EV is 0.29 times, 0.27 times, and 0.26 times, respectively.
Risk warning: 1) Policy implementation falls short of expectations; 2) A sharp decline in the number of agents; 3) Sudden catastrophe; 4) equity market fluctuations and credit risk exposure.