Incident: The company disclosed its 2024 quarterly report. Q1 achieved operating income of 95.4 billion yuan (YoY +1.1%) and net profit to mother of 11.8 billion yuan (YoY +1.1%); Taibao Life Insurance achieved insurance service revenue of 20.9 billion yuan (YoY -5.1%); and Taibao Industrial Insurance achieved insurance service revenue of 45.6 billion yuan (YoY +5.9%).
NBV showed outstanding performance and led the industry, and new life insurance policies achieved positive growth. Benefiting from product restructuring in the first quarter, cost reduction and efficiency driven by integrated reporting, etc., 2024Q1 Taibao Life Insurance achieved a new insurance scale of +0.4% year over year to 32.8 billion yuan, and NBV +30.7% year over year to 5.2 billion yuan, leading the industry. On the agent side, the company is firmly promoting the “three modernizations and five most” career marketing transformation, classification improvement, hierarchical customer management, and improving team marketing and customer management capabilities: 1) steady business growth, with new insurance channels reaching 161 billion yuan (YoY +31.3%); 2) the production capacity and revenue of high-performing teams increased, and U-manpower monthly per capita new order size of 830,000 yuan (YoY +33.7%), monthly primary commission income of 9313 yuan (YoY +14.1%); 3) Excellent growth and development of new personnel showed results. The proportion of human production capacity and newcomer contributions all increased year-on-year ; 4) The quality of business improved steadily, with individual insurance clients' 13-month and 25-month insurance policy continuation rates of +1.0pct and +7.3pct, respectively. In terms of banking insurance, we continue to insist on high-quality development. Affected by the integrated reporting and banking policy, the new insurance scale of the banking insurance channel reached 8.7 billion yuan (YoY -21.8%).
The comprehensive cost ratio of financial insurance has been optimized, and non-car insurance has maintained rapid growth. 2024Q1 Taibao Industrial Insurance achieved insurance service revenue of 45.6 billion yuan (YoY +5.9%) and original premium income of 62.5 billion yuan (YoY +8.6%). Thanks to car insurance cost and structure optimization, risk identification in non-car insurance optimization key areas, etc., the comprehensive cost rate of industrial insurance reached 98.0% (YOY-0.4pct). In terms of structure, car insurance premium income was +2.2% year-on-year to 26.5 billion yuan, and non-car insurance premium income was +13.8% year-on-year to 36 billion yuan.
Equity market volatility intensified, and return on investment remained basically the same as in the same period last year. As of the end of 2024Q1, the Group's investment assets were 2344.8 billion yuan (+4.2% compared to the end of the previous year), the return on total investment in Q1 reached 1.3% (YOY-0.1pct), and the return on net assets was 0.8% (same year on year). Facing a market environment with lower interest rates, the company actively allocates long-term fixed income assets and allocates undervalued and high-dividend equity investments. The overall investment performance is relatively steady.
Investment advice: Changhang operations continue to deepen, and debt-side performance is expected to be stable, moderate and positive. The company accelerated the second phase of the “Changhang” transformation project in 2024, adhering to value orientation, and leading the value performance of the new business in Q1.
We expect the company's 2024-2026 EPS to be 3.30 yuan, 3.77 yuan, and 4.24 yuan respectively, maintaining a buy-A investment rating and giving 0.5x2024 P/EV, corresponding to a 6-month target price of 29.17 yuan.
Risk warning: large fluctuations in the equity market, uncertainty in regulatory policies, continuing decline in the number of agents, etc.