Key points of investment
Performance Overview
In 2023, China Taibao's net profit was 27.257 billion yuan, -27.1%; operating profit to the mother was 35.518 billion yuan, a slight decrease of 0.4% year over year; under the new assumptions, life insurance NBV was 10.962 billion yuan, +19.1% year over year, if calculated according to the old caliber, NBV +30.8% year over year; comprehensive cost ratio (COR) of production insurance (COR) 97.7%, +0.8pc year over year; EV529.493 million yuan, compared to 2022; proposed dividend of 1.02 yuan per share, showing that the company shares are the same as in 2022 East The focus on stable returns; overall, in line with expectations.
Core Concerns
1. Life insurance: the value rate of new business drives rapid growth in NBV
(1) NBV: In 2023, the growth of life insurance NBV was mainly driven by an increase in the value ratio of new businesses. ① Value ratio: In 2023, the year-on-year increase was 1.7pc to 13.3%. It is estimated that this is mainly due to an increase in the share of futures trading. ② New policy premium: In 2023, the new insurance channel was +3.7%. Among them, the agent channel was +14.2% year over year, the banking insurance channel increased slightly by 3.6%, and the government channel was -15.9%.
(2) Channels: ① Agents: At the end of 2023, Taibao's agent size was 199,000, with an average monthly manpower of 210,000, -24.7%; production capacity increased rapidly, and the average monthly performance rate increased by 4.5 pc year-on-year to 67.9%. The monthly first-year premium and first-year commission income of core personnel increased 26.6% and 46.3%, respectively. ② Banking Insurance: In 2023, the NBV of the company's banking insurance channel was 1,854 billion yuan, accounting for 16.9%, doubling the year-on-year growth rate, reaching +115.6% (3). Prospects: Taibao will drive transformation with “quality”, strengthen team capacity upgrades, deepen the layout of multiple channels such as banking insurance, and build a new value growth pole. It is expected that the value rate of the new business will continue to rise in the future, which in turn will drive NBV's continued growth.
2. Industrial insurance: Strong non-car insurance premiums, increased COR
In 2023, Taibao Insurance's total premiums were 18.342 billion yuan, +11.4% year-on-year, mainly contributed by the rapid year-on-year increase in non-car insurance premiums, with non-car insurance premiums reaching +19.3%. Among them, the year-on-year growth rates of the main types of liability insurance, agricultural insurance, and health insurance reached +31.4%, +28.8%, and +18.6%, respectively; in terms of COR, the increase in the compensation rate (1.1 pc year-on-year increase) led to an overall COR increase of 0.8 pc to 97.7%. In terms of cost ratio, it decreased 0.3 pc year on year, reflecting the company's effectiveness in channel operation and fine management The COR for Taibao Auto Insurance and Non-Auto Insurance is 97.6% and 97.7% respectively, and the underwriting profit is still good. Looking forward to the future, the company is expected to maintain a steady decline thanks to the establishment of an “prevention and mitigation” integrated disaster response service model and risk reduction management system.
3. Investment: The decline in investment income is dragging down the company's profit
In 2023, Taibao's investment volume reached 2.25 trillion yuan, an increase of 15% over the end of 2022; net/total/2.6%/2.7% return on investment, -0.3pc/ -1.5pc/+0.4pc; total investment income was 52.237 billion yuan, -28.3% year over year, mainly affected by the new accounting standards and losses from securities trading and fair value changes caused by the stock market decline, which also dragged down the company's profits.
4. Hypothetical adjustments: Limited impact on the value of the new business
In 2023, Taibao lowered the long-term return assumption to 4.5% and the risk discount rate to 9%. Under the new assumption, Taibao NBV was 10.962 billion yuan, a decrease of 8.9% compared to the old assumption, with limited impact.
Profit forecasting and valuation
China's Taibao has anchored high-quality development. The second phase of the transformation of Changhang is progressing in depth, development momentum is increasing, and the life insurance and industrial insurance business is steady, moderate and improving. Taibao's net profit is expected to grow 18.5%/25.3%/21.1% year-on-year in 2024-2026. The current price corresponds to the 2024-2026 PEV 0.39/0.36/0.34 times PEV. The 2024 Group was given 0.6 times PEV, corresponding to a target price of 34.82 yuan, maintaining a “buy” rating.
Risk warning
Progress in reforms has been slow, the economic environment has deteriorated, long-term interest rates have declined sharply, and capital markets have fluctuated sharply.