The company disclosed its 2024 quarterly report. The NBV for life insurance was 5.191 billion yuan, +30.7% year on year; the original insurance premiums for industrial insurance were +8.6%, and the comprehensive cost ratio was 98.0%, -0.4 pt year on year; net profit to mother was 11.759 billion yuan, +1.1% year on year.
Life insurance NBV growth is expected to lead the industry, and the transformation of Changhang will continue to show results. 1) The NBV of 24Q1's life insurance was 5.191 billion, +30.7% (the 23-year base was not repeated), leading the main industry in growth (China Life Insurance +26.3%, Ping An +20.7%, Xinhua & Taiping is not expected to be disclosed), and has achieved continuous high growth since 22Q3, mainly due to the company's vigorous promotion of savings insurance sales during the favorable opening period to meet residents' strong demand for steady financial management. 2) The new insurance scale premium for the agent channel was 16.124 billion yuan, +31.3% year on year; the new insurance scale premium for the banking insurance channel was 8.718 billion yuan, -21.8% compared with the same period, mainly affected by the “integration of reporting and banking” policy. 3) The size of the high-performing team is stable, and production capacity and revenue continue to rise. The monthly premium per person for the first year of U Manpower is 830,000, +33.7%; the first-year commission income per person for U Manpower is 9313 yuan, +14.1% over the same period; the proportion of recruitment manpower, newcomer production capacity, and newcomer contributions all increased year-on-year. 4) There has been a steady increase in business quality. The policy continuation rate in December was 96.9%, +1.0pt year on year, and 92.9%, +7.3pt year on year in January.
Industrial insurance premiums are growing at the fastest rate, and the overall cost ratio has improved. 24Q1 achieved original insurance premiums of 62,491 billion yuan for industrial insurance, +8.6% year on year, leading the “old three” (human insurance +3.8%, safety +2.8%); of these, car insurance's original insurance premium income was 26.477 billion yuan, +2.2% year on year; non-car insurance premium income was 36.014 billion yuan, +13.8% year over year. The comprehensive cost rate was 98.0%, -0.4 pt year over year.
Profit performance is superior to major peers. 1) As of the end of the first quarter, the company's investment assets were 2344.793 billion, +4.2% compared to the end of the previous year; in order to respond positively to the low interest rate market environment, the company continued to allocate equity investment types with undervaluation, high dividends, and good long-term profit prospects. The net return on 24Q1 investment was 0.8%, the same year on year; the return on total investment without annualization was 1.3%, -0.1 pt year on year. 2) The 24Q1 company achieved net profit of 11.759 billion yuan, +1.1% year-on-year, and outperformed major peers (Ping An -4.3%, China Life Insurance -9.3%).
Maintain a “Highly Recommended” investment rating. The company's quarterly report performance slightly exceeded expectations. Both NBV and net profit performance are expected to outperform major peers, and the transformation results continue to be realized. In mid-April, Taibao Life Insurance disclosed that Cai Qiang no longer holds the position of general manager (CEO) of the company. Pan Yanhong was appointed as the temporary manager to act as general manager during the vacancy of Taibao Life Insurance's general manager; on April 26, Taibao Group announced that Cai Qiang was nominated as a candidate for the non-executive director of Taibao China, and personnel changes were implemented smoothly. If subsequent phased increases in interest rates or improvements in equity market sentiment bring opportunities for allocation in the insurance sector, the company's debt side is expected to maintain its leading performance advantage, and stock price valuations are expected to usher in further recovery due to capital resonance.
Currently, the company's stock price is only 0.44x 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.