Core views

The company's premiums for new orders in the first quarter were basically the same year on year. NBV was +30.7% year over year, and the value ratio is expected to improve significantly. The company's net return on investment stabilized year-on-year in the first quarter. As macroeconomic recovery continues, long-term interest rates are expected to rise steadily, equity market performance is also expected to pick up, company allocation pressure is expected to ease further, and investment income is expected to improve, supporting the company's subsequent performance growth. In the medium to long term, the transformation of the company Changhang continues to advance in depth, which is expected to continue to inject momentum into the company's long-term high-quality development.

occurrences

China Taibao reveals results for the first quarter of 2024

The company achieved net profit of 11.759 billion yuan in the first quarter of 2024, +1.1% year on year; Taibao Life Insurance achieved a new business value of 5.191 billion yuan in the first quarter, +30.7% year over year; Taibao Industrial Insurance achieved insurance service revenue of 45.556 billion yuan in the first quarter, +5.9% year over year, and a comprehensive cost ratio of -0.4 pct to 98.0% year on year.

Brief review

Life insurance: NBV +30.7% YoY. It is expected that the integration of reporting and banking will drive value ratio optimization in the first quarter, and the year-on-year optimization of new business value ratio will drive NBV +30.7% YoY. Taibao Life Insurance's NBV in the first quarter was +30.7% year-on-year to 5.191 billion yuan, and the total premiums for new policies from agents, banking insurance and group insurance channels were +0.4% year-on-year to 32.791 billion yuan. The quality of business has been improving steadily. The 13-month insurance policy continuation rate for personal life insurance customers in the first quarter was +1.0pct to 96.9% year-on-year. The 25-month policy continuation rate was +7.3pct year over year to 92.9%.

By channel:

In terms of agent channels, premiums for new orders in the first quarter were +31.3% year over year to 16.124 billion yuan, and futures accounted for -3.1 pct to 65.6% year over year. In terms of high-performing teams, the overall scale was stable, and production capacity and revenue continued to rise. U Manpower had a monthly first-year premium of 83,000 yuan per person in the first quarter, +33.7% compared to the same period, and the monthly first-year commission income of U Manpower was 9,313 yuan per capita, +14.1%; in terms of staff growth, excellent training results were shown, and the proportion of manpower recruitment, new talent production capacity, and newcomer contributions all increased year-on-year.

In terms of banking insurance channels, due to the “integration of reporting and banking” policy, premiums for new policies ranged -21.8% year-on-year to 8.718 billion yuan. The company deeply cultivates strategic cooperation channels, consolidates cooperative positions; focuses on improving team professional capabilities, strengthening standardized management of behavior; deepens professional management of Gaoke, continuously optimizes the supply of production and clothing, and strengthens the hierarchical and refined management of the customer base.

Industrial insurance: Overall volume increased and quality in the first quarter, maintaining a sustainable high quality development trend. On the revenue side, Taibao Insurance's insurance service revenue in the first quarter was +5.9% year-on-year to 45.556 billion yuan, and the original insurance premium income was +8.6% year-on-year to 62,491 billion yuan. Among them, car insurance and non-car insurance were +2.2%, +13.8% year-on-year to 26.477 billion yuan and 36.014 billion yuan, respectively. On the cost side, in the first quarter, the comprehensive cost ratio was -0.4 pct to 98.0% year on year. Among them, in terms of car insurance, we actively strengthened cost management and promoted the transformation of new energy vehicle insurance in accordance with regulatory requirements to achieve both cost and structure optimization.

Asset side: The return on net investment remained flat year on year. The return on total investment fell slightly year on year in the first quarter, the company's total return on investment (unannualized) was -0.1 pct to 1.3% year on year, and the return on net investment (unannualized) remained unchanged at 0.8% year on year.

In terms of fixed income investment, the company insists on actively allocating long-term fixed income assets under the guidance of strategic asset allocation to extend the term of assets. In terms of equity investment, the company continues to allocate equity investment types with undervaluation, high dividends, and good long-term profit prospects, steadily promotes innovative allocation models and investment strategies, and actively responds to the low interest rate market environment.

Based on the “interest income+investment income - insured financial loss - interest expense - credit impairment loss”, the company's investment service performance in the first quarter was -33.3% to 4.773 billion yuan. However, driven by year-on-year optimization of overall profit and loss of reinsurance contracts, year-on-year reduction in business and management expenses, and year-on-year reduction in income tax, the company's net profit for the first quarter was stable, +1.1% year over year.

Investment advice: Optimistic value ratio optimization will drive the company's NBV to continue to grow throughout the year. Subsequent investment service performance is also expected to improve the company's first-quarter premiums, which are basically flat year-on-year. NBV is +30.7% year-on-year, and the value ratio is expected to improve significantly. The company's net return on investment stabilized year-on-year in the first quarter. As macroeconomic recovery continues, long-term interest rates are expected to rise steadily, equity market performance is also expected to pick up, company allocation pressure is expected to ease further, and investment income is expected to improve, supporting the company's subsequent performance growth. In the medium to long term, the transformation of the company Changhang continues to advance in depth, which is expected to continue to inject momentum into the company's long-term high-quality development. We expect the company's NBV growth rate in 2024/2025/2026 to be 10.1%/10.5%/10.2%, respectively, giving the company a target price of 32.4 yuan for the next 6 months, corresponding to a PEV of 0.55 times in 2024, maintaining a “buy” rating.