Matters:

2024H1 achieved net profit of 38.278 billion yuan to mother, +10.6% year over year; achieved new business value of +18.6% year over year to 32.262 billion yuan. As of 2024H1, the included value was +11.4% over the end of the previous year to 1404.536 billion yuan. 2024H1, the company achieved an annualized net/ total return on investment of 3.03%/3.59%, -0.7pct/+0.25pct year-on-year. 2024H1, with a proposed cash dividend of RMB 0.20 (tax included) per share.

Commentary:

Thanks to the optimization of the term structure+policy changes, NBV has been steadily increased by price. 2024H1, the company achieved a total premium of 489.566 billion yuan, +4.1% year-on-year, including -6.4% year-on-year premiums for new orders. First-year premiums of ten years or more were +9.4% year-on-year, accounting for +0.4 pct to 8.7% of total premiums. The optimization of the term structure is expected to contribute in part to the increase in the value rate of new businesses. In addition, policy changes such as fixed interest rate adjustments and integrated reporting and banking also brought about an improvement in the value ratio of new businesses, driving steady growth of NBV. 2024H1 increased 18.6% year over year to 32.262 billion yuan. In the insurance structure, life insurance premiums were +4.1% year over year, accounting for 82.7%. Growth pressure came from the new order portion; health insurance was +6.0% year over year, accounting for +0.3 pct to 15.8% year over year; accident insurance was -11.8% year over year.

Individual insurance channels contributed to the main premium growth rate, and it is expected that the improved value ratio will lead to impressive NBV growth in banking insurance channels.

2024H1, individual insurance channels achieved a year-on-year premium ratio of +7.7% to 390.134 billion yuan, of which long-term insurance was +5.6% year-on-year; NBV was +14.6% year-on-year to 29.291 billion yuan, contributing 90.8%. As of 2024H1, the sales force of individual insurance was 0.629 million people, compared to Q1 +0.007 million people. The scale rebounded steadily during the quarter, and -0.032 million compared to the previous quarter. The results of the agent reform continued to be realized, with monthly first-year premiums per capita +12.4% year-on-year. In terms of banking insurance channels, 2024H1 achieved premiums of 49.73 billion yuan, or -19.9% year-on-year. The growth pressure mainly came from the new order portion. Long-term insurance was -53.6% year over year. It is expected to be significantly affected by the integration of reporting banks and a high base. Through the NBV calculation of the company's overall NBV and individual insurance channels, the total number of other channels (banking insurance, group insurance, etc.) achieved rapid NBV growth, +80.6% over the same period last year. It is expected that the cost reduction and efficiency of the banking insurance channel will drive an improvement in the value rate and drive NBV to achieve a remarkable growth rate.

The equity market drives the upward trend on the investment side and allocates mainly additional bonds. As of 2024H1, the company's investment assets were +12.5% compared to the end of the previous year to 6086.485 billion yuan. 2024H1, the company achieved an annualized net/total return on investment of 3.03%/3.59%, -0.7pct/+0.25pct year on year. The sharp increase in profit and loss from changes in fair value led to a year-on-year increase in total return on investment. In the configuration structure. Fixed income assets accounted for +2.28pct to 73.83% at the end of the previous year, of which bonds were +3.25pct to 57.36% compared to the end of the previous year, and non-standard assets -1.02pct to 8.93% compared to the end of the previous year; equity assets accounted for -0.71pct to 19.60% compared to the end of the previous year, of which stocks were -0.69pct to 7.26% compared to the end of the previous year, and funds were +0.68pct to 4.50% compared to the end of the previous year. From an accounting measurement perspective, among stock assets, FVOCI assets were +4.4pct to 7.8% at the end of the previous year (from China Life Insurance H share disclosure in 2023).

Investment advice: 2024H1 is price-driven to achieve a steady increase in NBV, and the agency team rebounded steadily during the quarter. It is expected that it will continue to contribute to the main growth rate in the future. Looking ahead to the second half of the year, performance growth is expected to rise steadily due to the low base effect of both financial burdens. We raised the company's 2024-2026 EPS forecast value to 2.01/2.27/2.46 yuan (the original value was 1.51/1.90/2.28 yuan), and maintained the 2024 PEV target value of 0.8x, corresponding to the 2024 target price of 41.12 yuan, maintaining the “recommended” rating.

Risk warning: Regulatory changes, agent transformation falling short of expectations, declining long-term interest rates, and equity market turbulence