Investment highlights: China Taibao announced 1Q24 results, and the core indicators all exceeded expectations. The NBV growth rate was strong, and COR bucked the year-on-year trend. Under capital market fluctuations, 1Q24 achieved net profit of 11.759 billion yuan, yoy +1.1%, which was significantly better than expected (we expect net profit to be yoy -12.2%).
NBV surged 30.7% year on year, exceeding expectations, and the size of new orders maintained a positive increase under the pressure of “integration of reporting and banking”. 1Q24 achieved NBV of 5.191 billion yuan, yoy +30.7% (we expect NBV yoy +28.2%), and its performance exceeded expectations; under the pressure of “integrated reporting and banking”, individual insurance performed well, driving yoy +0.4% of new premiums to 32.833 billion yuan. 1) Individual insurance channels have performed well, and core indicators have been rising steadily.
Strong demand+ reform results continued to show, with 1Q24 new insurance orders yoy +31.3% to 16.124 billion yuan; the team core performance was steady, the production capacity and income of the high-performing teams increased, the monthly first-year premium per capita yoy +33.7% to 83,000 yuan, monthly first-year commission income per capita yoy +14.1% to 9313 yuan; the recruitment of personnel, production capacity, and newcomer contributions all increased year-on-year; the proportion of personnel recruitment, newcomer production capacity, and newcomer contributions continued to increase year-on-year; business quality increased steadily, and management and control results continued to show year-on-year growth; personal life insurance continued to show a year-on-year increase; business quality continued to rise, and management and control results continued to show year-on-year growth. Customer's 13/25 month insurance policy continues The rate yoy+1.0pct/+7.3pct to 96.9%/92.9%. 2) The banking insurance channel is under pressure from new orders, but it is expected that the NBVM increase will help steady performance. Affected by the “integration of reporting and banking” and the new regulations to strictly control advance receipts, the new 1Q24 banking insurance policy YOY was -21.8% to 8.718 billion yuan; however, benefiting from the decline in processing fees, NBVM is expected to improve significantly year over year, helping channel NBV to perform steadily year over year.
Financial insurance underwriting performance exceeded expectations. 1Q24 Taibao Insurance's service income/original insurance premium income yoy +5.9%/+8.6% to 455.56/ 62,491 billion yuan; the comprehensive cost ratio yoy-0.4pct to 98.0% (we expect COR yoy+0.4pct to 98.8%). The direct losses caused by the disaster in the first quarter significantly exceeded expectations, and the cost control performance was impressive. 1) Car insurance:
1Q24 original insurance premium income yoy +2.2%. The company continues to strengthen quality cost management to achieve cost and structure optimization. 2) Non-car insurance: 1Q24 original insurance premium yoy +13.8%. The company continues to optimize risk identification and management capabilities in key areas to achieve coordinated quantitative and qualitative development.
The investment performance was impressive. As of the end of March, the company's total investment assets were 2344.793 billion yuan, an increase of 4.2% over the end of the previous year. The company's net/total return on investment (unannualized) in 1Q24 was 0.8% (year-on-year flat)/1.3% (yoy-0.1pct), respectively. The year-on-year performance of the capital market was impressive under pressure.
Investment analysis opinion: The 1Q24 performance exceeded expectations, reaffirmed the “buy” rating, and maintained profit forecasts. “Operation Changhang” is progressing steadily, and the core management is smoothly handed over. It is expected that the business strategy will continue to be strong, and I am optimistic about the sustainability of subsequent NBV growth. The strength and progress of the company's life insurance reform is superior to that of its peers. As the high-quality transformation of the industry continues to deepen, the company's first-mover advantage is expected to be further consolidated, the logic of undervaluation and high dividend will gradually be recognized by the market, and the valuation is expected to benefit from long-term interest rate improvement expectations. As of April 26, the company's PEV (24E) was 0.43x, maintaining a “buy” rating.
Risk warning: Regulatory policies are getting stricter, long-term interest rates are declining, equity market fluctuations, and reform performance falls short of expectations.