1H24's performance exceeded expectations. 1H24 achieved net profit to mother/operating profit of 74.619/78.482 billion yuan, yoy +6.8%/-0.6%, exceeding our expectations (we expect yoy +6.4%/-1.2%), and the year-on-year growth rate improved by 11.1pct/2.4pct compared to 1Q24, respectively. Among them, the operating profit of the three core business segments (personal insurance, financial insurance, banking) was +1.7%.

The Group's EV was +6.2% compared to the beginning of the year. The return on life insurance and health insurance annualized value included operating was 15.4%, yoy +1.0pct.

Under base pressure, 2Q24NBV remained flat year on year, and the number of agents achieved month-on-month growth for the first time. 1H24's NBV yoy was +11.0% to 22.32 billion yuan, which is basically the same as our expectations (we expect yoy +11.8%). Under base pressure, Q2 NBV remained flat year over year, showing strong performance resilience. The year-on-year improvement trend of NBVM continued, with 1H24 NBVM (first-year premium caliber) yoy+6.5pct to 24.2%. 1H24 new YOY -19.0% to 92.218 billion yuan; of these, 2Q24 new YOY -26.4% was mainly affected by the high base figure brought about by a sharp increase in customer savings insurance allocations (2Q23 YOY +94.1%) in anticipation of a reduction in scheduled interest rates in 2Q23. Looking at segmented channels: 1) Quantity stability and quality improvement for each insurance team: 1H24 NBV/ New Order/NBVMYOY +10.8%/-24.5% /+10.5pct. The company's recruitment entrance improved. As of the end of June, the number of agents was +2.1% to 0.34 million, achieving the first positive month-on-month increase since the second quarter of 2020. It is also the first listed insurer to achieve a positive growth rate. The results of the reform continued to show, with per capita NBV yoy +36.0%, activity rate yoy +1.8pct to 55.9%, and average monthly income per capita yoy +9.9% to 0.012 million yuan. 2) Banking insurance value growth rate is steady: 1H24 NBV/new order/NBVM yoy +17.3%/-18.1%, benefiting from the “integration of reporting and banking”. The premium caliber NBVM yoy+6.8pct for the first year reached 22.5%.

The improvement in financial insurance COR exceeded expectations, and underwriting profit yoy +15.7%. 1H24 financial insurance business insurance service revenue yoy +3.9% to 161.91 billion yuan, COR yoy-0.2pct to 97.8%, exceeding our expectations (we expect COR yoy +0.3 pct to 98.3%); among them, the comprehensive cost rate/comprehensive payout rate was 27.2%/70.6%, yoy-0.2pct/+0pct, respectively, mainly benefiting from the decline in guaranteed insurance coverage losses. Under a sharp rise in volume and price, 1H24 underwriting profit yoy +15.7% to 3.532 billion yuan.

The scale of investment assets has grown rapidly, and investment performance has been steady. The annualized net/total/comprehensive return on investment of 1H24 was 3.3%/3.5%/4.2%, yoy-0.2pct/+0.1pct/+0.1pct, respectively. By the end of June, the company's investment assets were +10.2% to 5.2 trillion yuan compared to the beginning of the year; among them, cash, term deposits, debt-type financial assets, long-term stock investments, investment properties, and other investments accounted for 2.9%/4.3%/74.1%/11.8%/4.0%/2.5%/0.4%, +0.3pct/-0.1pct/-1.4pct/-0.1pct/-0.3pct/-0.2pct/+0pct, respectively.

Investment analysis opinion: Maintain a “buy” rating and slightly reduce profit forecasts. The company's interim results exceeded expectations. It is recommended to focus on the positive catalytic effects of long-term interest rates stopping falling, falling debt costs, and marginal improvements in the real estate industry. Taking into account changes in the capital market, we slightly lowered our 24-26 profit forecast to 124.012/149.723/189.975 billion yuan (the original forecast was 1303.45/ 163.179/190.194 billion yuan). As of August 22, the company's closing price corresponding to P/EV (24E) was 0.52x, maintaining a “buy” rating.

Risk warning: The impact of regulatory policies exceeds expectations, equity market fluctuations, declining long-term interest rates, frequent disasters, and real estate risk exposure.