Value indicators have improved significantly. In 2023, China Taibao Group's insurance service revenue was 266.17 billion yuan, up 6.6% year on year; the group's embedded value reached 529.49 billion yuan, up 1.9% year on year. The company's debt-side transformation results were remarkable, and the core indicators continued to improve. Affected by factors such as capital market fluctuations and adjustments in accounting standards, the company achieved a cumulative net profit of 27.26 billion yuan, a year-on-year decrease of 27.1%, which is lower than the industry average. The company maintains a steady level of dividends. In 2023, it plans to distribute cash dividends of 1.02 yuan per share to all shareholders, the same as the previous year.
The second phase of “Changhang” is progressing steadily, consolidating the results of debt-side transformation. In the second half of 2023, the company launched the second phase of the “Changhang” transformation strategy, focusing on empowering internal and external collaboration and improving the efficiency of transformation and operation. 1) Individual insurance:
Based on the company's location advantage, all agents have the highest production capacity in the industry. In 2023, the company's individual insurance channels achieved large-scale premium revenue of 252.82 billion yuan, an increase of 3.2 billion yuan over the previous year. The renewal and new order business maintained steady growth, the quality of underwriting continued to improve, and the continuation rate of the 13- and 25-month insurance policies increased by 7.7 points and 10.6 points. The monthly commission income per capita of core workers increased sharply by 46.3% in the first year, driving the channel NBV to increase by 19.1%. 2) Banking insurance: Under the trend of stricter supervision, premium income from banking insurance channels bucked the trend. Among them, the premium payment scale for the new insurance period increased by 170.2% to 9.02 billion yuan, and channel NBV increased by 115.6%.
The growth rate of industrial insurance continues to lead the industry, and underwriting profitability is steady. By the end of 2023, the company's financial insurance business had achieved original insurance premium revenue of 18.34 billion yuan, an increase of 11.4% over the previous year. In terms of car insurance, benefiting from the increase in demand from new energy companies, the company's share of NEV premiums was further increased from 8.3% to 12.0%.
Furthermore, as the economic situation continues to recover, the growth rate of the non-auto insurance business reached 19.2%, which is higher than the industry average. In 2023, due to factors such as frequent disasters and increased demand for vehicles, financial insurance COR increased 0.8 pt to 97.7% year-on-year, and there was plenty of room for underwriting profit.
The configuration structure is optimized to cope with the low interest rate environment. In 2023, the company's asset management scale reached 2922.31 billion yuan, an increase of 10.1% over the previous year. Against the backdrop of low capital market fluctuations and a downward trend in interest rates, the company's return on investment performance was under pressure. Under Chinese corporate accounting standards, the total return on investment and net return on investment were 2.6% and 4.0%, respectively, down 1.5pt and 0.3pt from the previous year. The company continued to optimize the asset allocation structure and adjust the equity asset allocation ratio appropriately while allocating additional bonds. Among them, the share of bond assets increased by 8.7 points, and stock and fund assets decreased by 0.6 points and 0.2 points.
Investment advice: Based on the transformation and adjustment of the personal insurance industry and pressure on asset-side earnings, we lowered our 2024 and 2025 profit forecasts and added 2026 profit forecasts. The company's EPS is expected to be 3.28/3.52/3.65 yuan/share from 2024 to 2026 (originally 3.30/3.56 yuan/share in 2024/2025), and the corresponding p/EV is 0.39/0.36/0.34x, maintaining the “buy” rating.
Risk warning: Premium income falls short of expectations; continuing fluctuations in the equity market; declining interest rate centers, etc.