The company's profit performance rebounded steadily. In the first half of 2024, Xinhua Insurance achieved operating income of 55.59 billion yuan, an increase of 13.6% year on year; net profit to mother was 11.08 billion yuan, an increase of 11.1% year on year. Xinhua Insurance continues to promote the transformation of products, channels, and business structures. The quality of its business has improved markedly, and its core value indicators have rebounded sharply. As of the middle of the year, the value of the company's new business surpassed the full year level of the past two years, with a year-on-year increase of 57.7%, and the quality of business and profit margins improved markedly. The company's intrinsic value increased 7.1% year over year, and business quality continued to improve.

Individual insurance adheres to the transformation of term delivery to increase the profit margin of medium- to long-term underwriting. In the first half of the year, individual insurance channels achieved original insurance premium income of 68.72 billion yuan, a year-on-year decrease of 0.7%. The company continues to deepen the transformation of its channel business structure and promote the development of long-term long-term insurance. The first-year premium for long-term insurance was 8.49 billion yuan, an increase of 1.8% over the previous year. Among them, the first-year premium for long-term insurance was 8.26 billion yuan, an increase of 4.1% over the previous year. In terms of agent teams, the company launched a special team construction project for the “XIN Generation” program in the first half of the year to strengthen agent infrastructure management. As of mid-year, the monthly comprehensive production capacity of individual insurance channels was 0.0104 million yuan per person, an increase of 28.3% over the previous year. In the first half of the year, channel NBV was 2.78 billion yuan, up 39.5% year over year.

Banking Insurance enriches the supply of products and optimizes the channel structure. In the first half of 2024, due to factors such as the “integration of reporting and banking” restructuring in the industry, the premium growth rate of the company's banking insurance business slowed down, and the channel achieved the original insurance premium revenue of 1 billion yuan, a year-on-year decrease of 60.8%. In the current period of industry restructuring, the company is deeply involved in channel value development, strengthening middle and high-end customer management, developing a product system based on traditional insurance, giving full play to the channel's own advantages, and achieving medium- to long-term value growth. By the end of June, the banking insurance channel had achieved a premium payment ratio of 71.7% for the first year of long-term insurance, a significant increase of 34.3 points over the previous year. In the first half of the year, the banking insurance channel NBV increased sharply by 97.1% to 1.38 billion yuan, and the quality of business continued to improve.

Asset-side investment income increased sharply year over year, leading to an improvement in profit performance. In 2024, the company insisted on dynamically adjusting various asset allocations and trading opportunities to seize structural opportunities such as stocks and bonds, and the total return on investment was significantly improved. Judging from Liyuan's contribution, the company's investment performance increased by 41.6% year on year in the first half of the year, of which total net investment income was 30.38 billion yuan, up 42.8% year on year, achieving an annualized total return on investment of 4.8%, due to the industry average.

Investment advice: The company continues to promote debt-side value transformation, and the business value ratio has increased significantly. Furthermore, the company's relatively high equity allocation scale creates better stock price performance flexibility. We maintain our previous profit forecast. We expect the company's EPS to be 4.35/5.36/5.99 yuan/share from 2024 to 2026, corresponding to p/EV of 0.35/0.32/0.30x, maintaining a “superior to market” rating.

Risk warning: Premium growth falls short of expectations; long-term interest rates decline; asset returns decline, etc.