The investment side dragged down net profit performance for 24 years. 2023A achieved net profit attributable to mother of 27.26 billion yuan, -27.1% (traced back to I17 guidelines); the sharp decline in investment income was the main factor that dragged down the company's full-year results in '23. The company achieved net investment gain/total investment income of 777/52.2 billion yuan, respectively, +2.3%/-28.3% YoY; 2023A's net investment/total investment/comprehensive return on investment was 4.0%/2.6%/2.7%, respectively, compared with the same period in 2022 After the company applied the IFRS9 new financial instrument standard in 2023, the increase in the impact of equity market fluctuations on the net profit of the current statement was the reason for the sharp decline in total investment income.
The NBV is increasing due to the two-wheel drive of the Individual Insurance Bank Insurance Company, and the high quality development results of the Bank Insurance are impressive. The company's life insurance business achieved operating profit of 27.3 billion yuan in 23 years, +0.4% over the same period last year. Achieving NBV of 11 billion yuan (new hypothesis), +19.1% compared to the same period last year under comparable caliber; NBV margin increased by 1.7 pct to 13.3%.
Individual insurance: The channel achieved NBV of 9.1 billion, +8.8% year-on-year. The new single transaction policy covered $262 billion, +32.3% year over year, driving positive growth in personal insurance. The workforce is 199,000 people, down 42,000 from the same period last year; the company is steadily advancing the “long-term aviation” transformation, and the production capacity of agents has increased dramatically, with a monthly first-year premium of 12,800 yuan per capita, +51.8%; and the monthly first-year premium of core personnel is 43,500 yuan per person, +26.6% compared to the same period last year.
Banking insurance: The channel achieved NBV of 1.9 billion yuan, +116% year on year; annual premium payment of 9 billion yuan for the new insurance scale, +170% year over year. The sharp increase in term premiums increased the channel NBV Margin, driving the high-quality development of banking insurance.
EVs and NBVs have shrunk slightly due to adjustments in economic assumptions, and the new assumptions are more in line with current macroeconomic conditions. The 23 annual report adjusted the economic assumptions, where the return on investment assumption was reduced from 5% to 0.5% to 4.5%, and the discount rate was reduced from 11% to 2% to 9%. The adjusted 2023 life insurance includes a value of $402 billion, +1.0% compared to the same period in 2022 (not retroactive). The 23-year NBV was $110/12 billion under the new hypothesis/old hypothesis. After using the new economic hypothesis, the 23-year NBV was -9% compared to the old assumption. The new return on investment and discount rates are assumed to be more convincing under current macroeconomic conditions, and the authenticity of statements has been effectively improved. However, due to differences in stock and incremental product structures, it is assumed that the adjusted NBV/EV level will decrease.
Investment view: The company achieved positive growth on the debt side in '23, contributing the main momentum to the high-quality development of banking insurance channels; adjusting EV and NBV economic assumptions during the year improved report readability and EV trustworthiness. Looking ahead to 24 years, residents' current risk appetite is still low, and debt-side demand is still strong. We expect the company to continue to advance the “Changhang” transformation and obtain debt-side performance from leading peers, and we are optimistic about the company's future valuation repair space. Currently, the company's 2023 PEV is only 0.39x, which is relatively low in valuation. I am optimistic that the company will further consolidate the valuation repair space brought about by the leading edge of channel-side transformation in the future.
Risk warning: industry policies have been drastically adjusted; equity market has fluctuated greatly; insurance policy sales are not as good as expected