Transformation dividends have continued to be released, and profits have increased positively year over year. In the first quarter of 2024, China Taibao achieved total revenue of 95.43 billion yuan, an increase of 1.1% over the previous year. Among them, the company achieved insurance service revenue of 66.97 billion yuan, an increase of 2.4% over the previous year; the group achieved net profit of 11.76 billion yuan to mother, an increase of 1.1% over the previous year. The company's debt side continues to implement a series of transformation measures such as the “Long Aviation Operation”, and the core value indicators have steadily rebounded.
Downplay the “good start” and promote normalized management transformation. The company's personal insurance sector continues the “Changhang” Phase II transformation strategy. 1) Individual insurance: Continuing to implement the “three modernizations and five greatest” transformation direction for agents, and the core channel indicators have been greatly improved. By the end of the first quarter, individual insurance channels had achieved premiums of 16.12 billion yuan for new orders, an increase of 31.3% over the previous year; commission income for core personnel reached 9313 yuan in the first year, an increase of 14.1% over the previous year, laying the foundation for the continuous construction of subsequent outstanding teams. 2) Banking insurance: Under the trend of stricter supervision, the pace of channels was adjusted, putting pressure on the growth rate of new premiums in the short term. The banking insurance channel achieved large-scale premiums of 12.38 billion yuan, an increase of 0.7% over the previous year.
In terms of the scale of new insurance, the year-on-year decline was 21.8% due to adjustments in the pace of channel sales and “integration of reporting and banking”.
Non-auto insurance seizes policy opportunities and maintains a double-digit growth rate. By the end of the first quarter of 2024, the company's financial insurance business had achieved original insurance premium income of 62.49 billion yuan, an increase of 8.6% over the previous year. In terms of car insurance, the company continues to strengthen the new energy cost control mechanism to promote business transformation. In terms of non-car insurance, the company achieved non-car insurance premium revenue of 36.01 billion yuan in the first quarter, an increase of 13.8% over the previous year, and continued to maintain a high growth rate. In the context of serving the national strategy and rural revitalization, the company deepened the “Agricultural Insurance +” product service system to increase the breadth and depth of non-car insurance business. In terms of the comprehensive cost ratio, in the first quarter of 2024, the company's comprehensive underwriting cost ratio was 98.0%, which was optimized 0.4 pt year over year under risk reduction and other measures.
The configuration structure is optimized to cope with the low interest rate environment. In the first quarter of 2024, the company's investment assets reached 2344.79 billion yuan, an increase of 4.2% over the end of 2023. Since this year, the continued decline in long-term bond yields reflects the lack of safe assets in the market. It is expected that in the future, with the issuance of ultra-long-term special treasury bonds, the “asset shortage” will ease somewhat, and long-term bond yields are expected to pick up, which is beneficial to continued recovery on the insurance asset side. Furthermore, the stock market showed a recovery trend. In this context, the company continued to optimize its asset allocation structure and achieved a weighted average return on net assets of 4.6% in the first quarter, a year-on-year decrease of 0.3 pt.
Investment advice: As the company's “Changhang” Phase II transformation strategy progresses steadily, reform dividends continue to be released, and operating results are steady. Furthermore, in line with the current level of asset returns in the market, the company actively optimizes the overall allocation structure. Therefore, we maintain our previous profit forecast. From 2024 to 2026, the company's EPS is expected to be 3.28/3.52/3.65 yuan/share, corresponding P/EV is 0.43/0.41/0.38x, maintaining a “buy” rating.
Risk warning: Premium income falls short of expectations; continuing fluctuations in the equity market; declining interest rate centers, etc.