Key points of investment

The company announced its 2014 semi-annual report. In the first half of 2024, the company achieved operating income of 494.966 billion yuan, +1.3% year-on-year, and net profit to mother of 74.619 billion yuan, or +6.8% year-on-year. Among them, the three core businesses of life insurance and health insurance, property insurance, and banking continued to grow. The total operating profit of the three businesses attributed to shareholders of the parent company was 79.565 billion yuan, an increase of 1.7% over the previous year.

(1) Life insurance and health insurance premiums for the first half of the year were 387.766 billion yuan, +2.07% compared with the same period last year.

NBV 22.32 billion yuan, +11% year over year. Mainly, production capacity continued to increase, with agent channel NBV +36% year over year; new business value ratio was 24.2%, +6.5 PCT year over year. At the end of June, the number of personal insurance agents was 0.34 million, -2% from the end of 23, but the recovery from 0.333 million at the end of March has begun to rise.

We expect the number of agents to stabilize this year. In the first half of 2024, the NBV of the banking insurance channel was 2.641 billion yuan, +17.3% year-on-year. (2) Income from industrial insurance was 161.91 billion yuan, +3.9% year-on-year. Mainly driven by car insurance revenue +6% year over year and eHealth Insurance +11.2% year over year. (3) Net profit from banking business was 25.879 billion yuan, +1.9% year-on-year; However, operating income of -13% compared to the same period and net interest spread of -0.59 PCT were mainly affected by factors such as continued concessions to the real economy, adjustments in asset structure, and declining market interest rates. (4) In terms of investment business, the investment scale at the end of June was >5.2 trillion yuan, +10.2% compared to the beginning of the year. The annualized comprehensive return on investment was 4.2%, +0.1 PCT year over year, mainly due to the balanced asset allocation strategy and the improvement of equity assets over the same period.

Investment advice

The company's three core businesses continued to grow. In particular, the steady recovery in the size of life insurance agents and the increase in per capita production capacity and value ratio of new businesses boosted NBV by 11%. Furthermore, the investment scale surpassed 5.2 trillion yuan for the first time. Once the capital market strengthens in the future, it will strongly improve the company's performance.

We expect the company's performance to continue to improve and break out of the trough. The company's EPS for 24-26 is estimated to be 5.52/6.17/6.78 yuan/share, maintaining an increase rating.

Risk warning:

The equity market continues to fluctuate, the transformation progress falls short of expectations, agents have declined on a large scale, and long-term interest rates have declined.