The company disclosed premium data from January to May 2024. The growth rate of single-month car insurance and non-car insurance improved sequentially. The company continues to optimize its business structure and risk control capabilities, and is expected to achieve steady growth throughout the year. The current valuation of the company corresponds to 0.79 times the net assets at the end of 24. It is recommended to focus on low allocation opportunities.
The overall premium growth rate has been rising steadily. The company achieved cumulative premium income of 249.121 billion yuan in January-May, an increase of 3.1% over the previous year. Among them, the car insurance business achieved premiums of 113,935 billion yuan, an increase of 2.7% over the previous year, and the non-car insurance business achieved premiums of 135.186 billion yuan, an increase of 3.4% over the previous year. Looking at a single month, in May, the company achieved premium revenue of 38.626 billion yuan, up 4.4% year on year. Among them, car insurance premiums increased 4.4% year on year, and non-car insurance premiums increased 4.3% year on year.
Auto insurance premiums have been growing steadily. In May, the company's car insurance premiums increased 4.4% year on year, +0.9 pt. On the one hand, the growth rate improvement benefited from the month-on-month increase in domestic passenger car retail sales in the narrow sense of the word. On the other hand, with the acceleration of car insurance fee regulations and industry self-regulation, the year-on-year decline in average car premiums is expected to narrow. In the future, with the end of the spring wave of price cuts for new cars and driven by the “trade-in” policy, the car market is expected to continue to pick up, thus driving the much-needed car insurance through the cycle.
The growth rate of non-car insurance premiums has improved markedly, and the policy has guided the expansion and quality of agricultural insurance. The company's non-car insurance premiums increased 4.3% year-on-year in May, +12.1pt month-on-month. Looking at the breakdown, liability insurance ($2,778 million, +17.1% year over year) achieved significant growth under the lower base of the same period last year; eHealth Insurance (4.782 billion yuan, +5.5% year on year) and agricultural insurance (5.109 billion yuan, -2.7% year over year) growth rates improved markedly, mainly due to the acceleration of some policy business contracts; corporate financial insurance ($1,021 million, -5.2% year over year) and guarantee insurance (350 million yuan, -8.17.1% year over year) continued to increase but the decline narrowed. It is expected that the company will actively reduce the risk underwriting of high-risk businesses Sincerely.
In May, the executive meeting of the State Council emphasized subsidies to prevent arrears in full cost insurance and planting income insurance for the three major grain crops. Subsequently, the Ministry of Finance, the Ministry of Agriculture and Rural Affairs, and the General Administration of Financial Supervision jointly issued the “Notice on Fully Implementing the Full Cost Insurance and Planting Income Insurance Policies for the Three Major Food Crops Nationwide”, which clearly states that full cost insurance and planting income insurance policies for the three major grain crops will be fully implemented nationwide starting this year. Agricultural insurance coverage is expected to expand further and become an important support point for the growth of the company's non-vehicle insurance business.
Investment advice: Maintain a “Highly Recommended” rating. The growth rate of the company's car insurance and non-car insurance premiums improved sequentially in May, and is expected to maintain steady growth throughout the year. We emphasize that the company, as a leader in the financial insurance industry, has a stable ROE, high dividend rate, and long-term investment value. The current valuation of the company corresponds to 0.79 times net assets at the end of 24, the target valuation is 1 times PB by the end of 24, and the target price is HK$12.4. It is recommended to focus on low allocation opportunities.
Risk warning: increased market competition, changes in regulatory policies, natural disasters exceeding expectations, economic recovery falling short of expectations, weak automobile consumption.