Incident: The company disclosed 1H24 results, which exceeded expectations. 1H24's net profit to mother was 11.08 billion yuan/yoy +11.1%, of which 2Q quarterly profit was 6.14 billion yuan/yoy +101%; new business value 3.9 billion yuan/yoy +57.7% (1H23 base was not adjusted retroactively); withdrawal rate 0.9%/yoy-0.2pct. 1H24 Company's annualized net/ total/ comprehensive return on investment of 3.2%/4.8%/6.5%, yoy-0.2pct/+1.1pct/+1.8pct; mid-term dividend of 0.54 yuan/share, 15% dividend.

Improved return on investment drove 2Q profits to double, and profits are expected to continue to accelerate. 1H24's annualized total/comprehensive return on investment is 4.8%/6.5%, yoy+1.1pct/+1.8pct. It is expected that the improvement in equity investment will drive the increase in fair value (1H24 fair value change profit and loss 14.97 billion yuan/yoy +105%); thanks to improved investment, the company's 1H24 profit yoy +11.1%, and the growth rate is significantly improved compared to 1Q growth rate (yoy -28.6%), of which 2Q24 profit yoy +101%. The company's 2H23 base is extremely low. Net profit from 3Q-4Q23 was -0.44 billion and -0.83 billion, respectively. Under the relatively stable market, 2H24 profits are expected to continue to accelerate.

NBV increased significantly year over year and is expected to remain stable throughout the year. 1H24's NBV 3.9 billion yuan/yoy +57.7%, including NBV 2.78 billion yuan/yoy +39.5%, NBVM 30.5%/yoy +8.6% (calculated value), is expected to contribute due to lengthening payment periods, reservation interest rate and settlement rate adjustments. Banking Insurance NBV 1.38 billion yuan/yoy +97.1%, NBVM 13.8% /yoy+11.1pct (calculated value). The significant increase in value ratio is expected due to integrated reporting and bank fee control and business structure optimization. NBV is expected to remain stable throughout the year, driven by the peak of the previous year's base figure at the end of July, the adjustment of interest rates scheduled for August/September, and significant improvements in the company's business structure.

Premium structure optimization, team quality improvement. The first-year premium of 1H24 long-term insurance is 18.59 billion yuan/yoy -45.1%, of which the prepayment premium accounts for 83.3% /yoy+31.6pct, and the business structure continues to be optimized; the premium payment is 3.11 billion yuan/yoy -81%, which is the main reason for the decline in new orders and total premiums. By channel: ① Insurance period payments continued to grow, team quality improvement: 8.26 billion yuan/yoy +4.1% for 1H24 insurance periods, expected to continue to be released due to residents' savings demand; agent size was 0.139 million, down 10.3% from the beginning of the year, but per capita production capacity and high-capacity manpower continued to increase, with an average monthly per capita comprehensive production capacity of 0.0104 million/yoy +28.3%, average monthly average 10,000 C (average monthly first-year commission income ≥0.01 million yuan) manpower yoy +19%/share YOY+1pct ② The banking insurance structure continues to be optimized: the 1H24 installment premium is 7.14 billion yuan/yoy -24.9%, accounting for 71.7% /yoy+34.3pct of first-year premiums for long-term insurance.

Business quality has improved significantly, and operating experience has contributed to EV growth. 1H24's 13-month continuation rate is 95.0% /yoy+5.8pct; 25-month continuation rate 85.6% /yoy+6.6pct; 1H24 withdrawal rate is 0.9% /yoy-0.2pct, and business quality continues to improve. The EV at the end of 1H24 was 268.4 billion yuan, +7.1% from the beginning of the year. Among them, the operating experience deviation was 4.41 billion yuan, and the growth contribution accounted for 24.7%. It is expected that the improvement in business quality is an important driving factor.

Investment advice: Maintain the company's “Highly Recommended” rating. Debt side: The company's business quality has been steadily improved, and the business structure is continuously optimized. The NBVM upgrade is expected to drive NBV to continue to grow rapidly. Asset side: Investment income has improved steadily, 2H24 profit growth is expected to increase quarter by quarter under a low base, and asset burden resonance continues.

Net profit for 24-26 is estimated to be 15, 17.7, and 19.95 billion yuan, with year-on-year growth rates of +72.1%, +18.0%, and +12.7%; 24-26 NBV 5.05, 5.75, and 6.42 billion yuan, respectively, +66.9%, +13.9%, and +11.6% year-on-year, respectively. The current closing price corresponding to 24E-26E dynamic P/EV is 0.34 times, 0.32 times, and 0.31 times, respectively.

Risk warning: 1) Policy implementation falls short of expectations; 2) The number of agents has declined sharply; 3) equity market fluctuations, and credit risk is exposed.