Build a comprehensive insurance group with balanced development of multiple business segments. 1) China Taibao was established in May 1991 and completed the reform of the sub-business management system in 2001. After years of accumulation, Taibao Group already owns personal insurance companies, property insurance companies, asset management companies, pension insurance companies, and agricultural insurance companies, and has achieved full insurance license management. 2) Taibao's shares are scattered, there is no actual controller, the equity structure is healthy and reasonable, and the company's management is rich in experience. 3) The overall operation of the company has been steady in recent years, achieving operating income of 323.9 billion yuan in 2023; due to the implementation of the new accounting standards, net profit to mother was 27.3 billion yuan, -27% year-on-year; total assets increased to 2.34 trillion yuan.
Personal insurance business: “Operation Changhang” has achieved remarkable results, leading the industry in many indicators. 1) Taibao Life Insurance has advanced the “Long Aviation” transformation in depth, helped value continue to grow in a balanced manner through multiple channels, upgraded the customer-centered product service system, and comprehensively built enabling headquarters and management organizations. The business performance showed a good development trend. 2) The life insurance business is the company's main source of profit, with net profit accounting for nearly 70% of the group in 2023. 3) Since 2021, Taibao Life Insurance has officially begun to promote the transformation of “Operation Long Aviation”. After experiencing short-term pain, it has gradually begun to show results, and various business data have achieved industry-leading results. NBV was 11 billion yuan in 2023, up 19.1% year on year under an uncomparable scale, higher than China Life Insurance and China Ping An, and achieved a new business value of 5.19 billion yuan in the first quarter of 2024, an increase of 30.7% year over year. 4) Taibao Life Insurance continues to deepen the “three modernizations and five greatest” career marketing transformation. The core workforce is growing rapidly, and the quality of business has improved markedly. Although the size of the sales force is still declining, the proportion of highly qualified core manpower has increased, and per capita production capacity has increased dramatically, which is an important driving force for the company's future business growth.
Property insurance business: The market share is steadily increasing, and the comprehensive cost ratio is continuously optimized. 1) Taibao Industrial Insurance is committed to high-quality development, accelerates the sustainable development strategy, and achieves an overall improvement in the company's operation and management capabilities.
From 2019 to 2022, Taibao Insurance's total premium income increased from 133 billion yuan to 188.3 billion yuan, with a compound growth rate of 9.1%. It ranked third in the domestic financial insurance market, and its market share gradually increased, gradually getting closer to the second-place Ping An Industrial Insurance Company. 2) Taibao Industrial Insurance continues to strengthen business quality management. The comprehensive cost ratio of core indicators has performed well, and has maintained stable underwriting profits in recent years. The company's comprehensive cost ratio in the first quarter of 2024 was only 98%, which is better than Ping An Insurance. It is close to Human Insurance, and is the only company among the three listed industrial insurance companies to achieve a year-on-year improvement.
Asset management business: Stable asset allocation style and stable return on investment. The size of the Group's total assets under management continued to rise, growing to 2.3 trillion yuan in 2023. The company adheres to a steady asset allocation style and has stable historical investment returns. China Taibao's net and total return on investment in 2023 were 4.0% and 2.6% respectively, which is at the midstream level among the five listed insurers. It can provide stable return on investment support for the insurance industry.
The valuation is still low, giving it an “better than the market” rating. We believe that as the company's “Operation Changhang” promotes the deepening transformation of the personal insurance sector and the gradual improvement of agent conditions, the pension community is leading the implementation of the Big Health Blueprint in an orderly manner; the property insurance sector focuses on systematic capacity building. The company is expected to break through the fierce competition in the industry. The current A-share price is only 0.47x the 2024E PEV, which is undervalued. We gave the company 0.6-0.7 times the 2024 PEV, a reasonable value range of 36.33-42.38 yuan, and a “superior to the market” rating.
Risk warning: 1) Long-term interest rates are trending downward; 2) The stock market fluctuates greatly; 3) New premium growth falls short of expectations.