The company disclosed its 2024 quarterly report, achieving NBV of 12.889 billion for life insurance, +20.7% year over year; net profit to mother of 36.709 billion yuan, -4.3% year over year; and operating profit to mother of 38.709 billion yuan, -3.0% year over year.
The recovery trend on the debt side of life insurance continues, and the quality of channel operations has been optimized. 1) The company achieved NBV of 12.890 billion in the first quarter, a year-on-year ratio of +20.7%, mainly due to the popularity of Kaimon Savings Insurance; the value rate of the new business was 22.8%, +6.5 pt year over year under comparable caliber, mainly affected by factors such as product restructuring, lengthening payment cycles, and changes in channel structure. 2) The number of company agents at the end of the first quarter was 333,000, -4.0% compared to the beginning of the year, and is expected to pick up; NBV per capita was +56.4%, and the proportion of “excellent +” in the new manpower was +11.0pt year over year. The team's production capacity continued to increase, and the entrance to increase staff continued to improve through excellent growth. The company got off to a good start in the first quarter and faced shocks such as adjustments to the advance payment policy, but benefiting from strong demand from residents for sound financial management and the outstanding product strength of savings-type insurance, the debt side still achieved relatively rapid growth. Since 24Q2, the NBV growth rate may face some pressure due to the high base for the same period last year. However, we believe that the continued transfer of residents' asset allocations is expected to open up new space for savings insurance growth. At the same time, considering the possibility that interest rates for life insurance products will be lowered again, debt-side performance throughout the year may exceed previous expectations.
The industrial insurance business grew steadily, and COR increased year over year. The company achieved revenue of 80.627 billion yuan from industrial insurance services in the first quarter, +5.7% year-on-year. The comprehensive cost rate was 99.6%, +0.9 pt year over year, mainly affected by the blizzard disaster and travel recovery in the early Spring Festival (the Blizzard disaster increased the comprehensive cost rate by 2.0pt this quarter); the overall comprehensive cost rate after excluding guarantee insurance was 98.4%. With the gradual clearance of the stock business, it is expected that the impact of the credit insurance business on COR throughout the year will be limited.
Investment returns were stable, and the share of real estate continued to decline. 1) The company's annualized comprehensive return on investment in the first quarter was 3.1%, -0.2 pt year on year, mainly affected by equity market fluctuations; the annualized net return on investment was 3.0%, -0.1 pt year over year, mainly due to downward interest rate pressure on new and reallocated assets. 2) As of the end of the first quarter, the company's real estate investment balance was 206.435 billion, accounting for 4.2% of the total investment assets, of which property rights, claims and other equity investments accounted for 79.8%, 16.2%, and 4.0%, respectively.
Net profit declined slightly year-on-year, and operating profit from core businesses remained steady. The company achieved net profit of 36.709 billion yuan in the first quarter, -4.3% year over year; achieved operating profit of 38.709 billion yuan, -3.0% year over year. The three core businesses of life insurance and health insurance, property insurance, and banking resumed growth. The total operating profit of the three businesses was +0.3% year over year, but asset management (-30.3% YoY) and technology (from profit to loss) businesses were dragged down. It is expected that a small number of projects will be affected by depreciation and pressure on individual platforms affected by macroeconomic business.
Maintain a “Highly Recommended” investment rating. Against the backdrop of strong supply and demand for savings insurance, the company's life insurance business started “well” as scheduled in 2024, and the industrial insurance business is developing steadily and improving; asset-side OCI shares account relatively high, which can not only provide continuous dividend cash flow, but also have a strong ability to withstand market fluctuations. Looking ahead to the whole year, the debt-side boom is worry-free, and marginal improvements on the asset side are expected to bring about a significant recovery in profits and stock prices. Currently, the company's stock price is only 0.49x the EV at the end of '24, and it is expected that there will be plenty of room for further growth.
Risk warning: Life insurance development is struggling, product attractiveness is declining, team transformation is lower than expected, economic growth is weak, regulations are tight, stock market is sluggish, and interest rates are declining.