Glonghui, May 7 | Jefferies published a research report showing that Xinhua Insurance's attributable profit for the first quarter of the 2024 fiscal year fell 29% year-on-year to 4.9 billion yuan, and was corrected when compared quarterly. The bank said that in addition to the decline in profit, which was greater than that of its peers, the company's total comprehensive loss reached 11 billion yuan, which also led to an 11% drop in the company's book value. Jefferies said that Xinhua Insurance is facing a number of negative factors. The company's investment was under pressure, with total investment income, including associated companies, and annualized total return on investment falling; other comprehensive profit and loss (OCI) losses of $16 billion were confirmed in the first quarter of fiscal year 2024, as OCI bond earnings were far insufficient to offset the increase in insurance liabilities; the company's premium income fell 13% year over year, or dragged down by sluggish sales in previous years; and core solvency fell 14.4 percentage points to 142.6%. Jefferies believes that although the value of Xinhua Insurance's new business is strong, it is overshadowed by profitability challenges. However, in the face of weak profitability, the erosion of the company's book value, as well as the issue of dividend sustainability, may still be the main focus of investors in the near future. The bank gave it a target price of HK$11, which gave it a rating of “outperforming the market”.