Key points of investment
The company issued an announcement. Premium revenue for January-April was 67.224 billion yuan, -11.7% year-on-year.
(1) The decline in premium income may be related to the continued decline in the number of agents and the “integration of reporting and banking”. At the end of 23, the number of agents was 155,000. On top of the 50% reduction in '22, it was once again reduced by more than 20%, and the scale was only 1/4 of what it was at the end of 2020. (2) NBV grew rapidly in the first quarter, +51% year over year. (3) Optimization of the total premium structure. Renewal premiums remained stable, at $44.601 billion in the first quarter, a slight increase of $1,179 million over the previous year, while premiums paid for ten-year terms and above amounted to $993 million, +83.9% year-on-year. (4) Individual insurance channel premiums for the first quarter were 39.821 billion yuan, -3.1% year-on-year.
Among them, long-term insurance premiums for the first year were +20.8% year-on-year. (5) The size of the banking insurance channel has shrunk significantly, but the structure has been optimized. Affected by the “integration of reporting and banking” and the reduction in predetermined interest rates for insurance products, the scale of banking insurance channels has shrunk. Channel premium revenue for the first quarter was 15.875 billion yuan, -29.4% year-on-year. At the same time, renewal premiums increased by 46.5% compared to the same period, accounting for an increase of 33.5 pcts. (6) The return on investment improved in the first quarter. The company's annualized comprehensive return on investment in the first quarter was 6.7%, +1.0 pct year over year. At the same time, the scale of the company's stock investment in the first quarter also increased compared to the end of '23.
Investment advice
It has been more than 3 years since the 20-year Insurance II (801194) index peaked, and the overall fundamentals of the insurance industry are gradually bottoming out. In January, the State Assets Administration Commission proposed deepening market value management; in April, the State Council stated that it would concentrate on building a financial “national team”; in May, the central bank set up a new 300 billion reloan for affordable housing to promote “inventory removal” of real estate. These policies and news are expected to further revalue central enterprises and support the insurance sector to show a relatively strong performance this year. Despite the decline in the company's revenue, the company quickly adjusted its structure and improved quality. In particular, NBV achieved rapid growth of > 50%, and it is expected that the company's fundamentals will gradually recover. EPS is expected to be 3.27/4.01/4.52 yuan/share in 24-26, maintaining an increase rating.
Risk warning:
The equity market continues to fluctuate, and the progress of transformation falls short of expectations. Agents have once again declined on a large scale, and long-term interest rates have declined.