The company expects premium revenue growth in 2024 to be no less than the GDP growth rate. In 2023, the company's premiums increased 6.3% year on year. Among them, car insurance premiums increased 5.3% year over year. The growth rate of the company's car insurance premiums was lower in January-January 2024, mainly due to the earlier liberalization of discount factors, but the company's car insurance signing speed was better than the market average. The company expects to benefit from trade-ins, car trips to the countryside, and improved charging infrastructure, and the car insurance growth rate is still expected to rise to about 5%; in terms of policy business, agricultural insurance and social security businesses are expected to maintain steady growth; and the overall premium revenue growth rate is not lower than the GDP growth rate (5%).
The overall cost ratio is expected to improve in 2024. The comprehensive cost rate in 2023 was 97.8%, up 1.2 percentage points year on year. The comprehensive car insurance ratio (COR) was 96.9% (+2.4 percentage points), and the non-car insurance COR was 99.1% (-1.1 percentage points). The company expects that in 2024, under normal natural disasters, car insurance COR will remain around 97%, and non-car insurance COR will be controlled within 100%, aiming for further optimization. In the non-car insurance business, the company will strengthen risk reduction management through innovative development models; reduce high-compensation business; accelerate high-quality business development (such as personal non-car insurance) to promote the improvement of non-car insurance COR.
The company maintains a solid leading edge in the auto insurance business. The company has data, pricing, channel, claims and cost advantages in the auto insurance business, and has a stable market share. In terms of NEV insurance, the company's market share exceeds one-third. The pricing model, third-party technology, cost, and claim advantages are all significantly better than the industry. COR is superior to the industry. In the future, as insurance rates and maintenance costs improve, there is still room for improvement in NEV COR.
The investment business performed steadily. The total return on investment in 2023 was 3.5%, down 0.3 percentage points from the previous year. Joint ventures and joint ventures account for more than a quarter. The return on investment is expected to improve slightly in 2024.
The solvency is sufficient, and the dividend capacity is sustainable. The company plans to pay a dividend of 0.489 yuan per share, with a year-on-year increase of 2.3%, and a dividend rate of 44%, an increase of 7.8 percentage points over the previous year. Core solvency at the end of 2023 was 208.7%, up 6.8 percentage points from the beginning of the year.
Maintain a buy rating. We expect the company's underwriting profit and investment income to improve in 2024. Net profit to mother is expected to increase 7% year over year, and ROE is expected to remain at 11%. The company's leading market position is stable, profitability is stable, dividend capacity is sustainable, and high dividend attributes are outstanding. Based on the 2024 1X market account ratio, we raised our target price from HK$10.5 to HK$12.0 to maintain our buying rating.