[Event] China Taiping released its 2024 mid-year report results: 1) Net profit of HK$6.03 billion, +15.4% year over year; of these, life insurance/ domestic financial insurance/ overseas financial insurance/ reinsurance/ asset management were +4.9%/+74.5%/+74.5%/loss to profit (loss of HK$0.29 billion for the same period last year)/+183.3%. 2) Taiping Life NBV 6.69 billion yuan, +83.6% YoY; NBV Margin 24.6%, +12.4pct YoY. 3) Taiping Life EV HK$266.8 billion +8.7% compared to the beginning of the year. 4) Net assets attributable to mother after deducting perpetual bonds were HK$78.7 billion, -0.4% compared to the beginning of the year.

The Group's overall insurance service performance was HK$11.2 billion, +38.0% year over year. The contract service margin was HK$215.5 billion, +2.0% compared to the beginning of the year. Tax expenses in the first half of the year were 7.55 billion yuan, compared to only 0.32 billion yuan in the same period last year.

Life insurance: New policy premiums increased significantly year-on-year, and banking insurance NBVM increased significantly. 1) Insurance service performance of HK$10.3 billion, +35.0% year over year. The contract service margin was HK$214.6 billion, -0.9% compared to the beginning of the year. 2) Premium: Taiping Life's new policy premium was -8.8%; the individual insurance/banking insurance were +7.3%/-30.0%, respectively. Individual long-term insurance paid HK$15 billion in the first year, +11.7% compared with the same period. Bank Insurance long-term insurance paid HK$9.34 billion in the first year, or -30.4% year-on-year; the share of premiums for new insurance channels was +9.4pct year-on-year. 3) NBV: Individual insurance channels NBV 5.24 billion HKD, +59.8% year over year; banking insurance channel NBV 1.87 billion HKD, +303.7% year over year. The NBV margin of individual insurance/banking insurance channels was +8.9pct/+16.4pct year-on-year, respectively, to 27.5%/20.0%. We believe that the sharp increase in the banking insurance channel NBVM is mainly related to the implementation of the “integration of reporting and banking” policy. 4) Manpower: The number of agents is 0.228 million, -3.0% compared to the beginning of the year. The per capita premium was +62.5% to 0.023 million yuan compared to the beginning of the year.

Industrial insurance: Comprehensive cost ratio optimization, water insurance premium growth rate is high. 1) Taiping Insurance's service performance was HK$0.5 billion, +27.6% year over year. The comprehensive cost rate was 97.0%, -0.6pct year over year. 2) Taiping Insurance made a profit of HK$0.37 billion in the first half of the year, +100.3% year-on-year. 3) The original premium income of Taiping Insurance was HK$18.8 billion, +1.7% year over year, of which car insurance/water insurance/non-water insurance were +0.9%/+17.9%/+2.2%, respectively. 4) In the overseas financial insurance business, Taiping Hong Kong/Taiping Macau/Taiping Singapore/Taiping Indonesia profit was -45.1%/+24.0%/+175.3%/+557.6%, respectively. The comprehensive cost rates were 92.1%/80.6%/85.6%/88.5%, respectively, +0.4pct/+12.4pct/-6.9pct.

Investment: Increase in fixed income and reduce dividends, and the comprehensive return on investment has increased dramatically due to the fair value of bonds. 1) Investment assets were HK$1476.4 billion, +9.4% compared to the beginning of the year. The share of fixed income and equity assets was +3.6pct/-3.0pct, respectively. 2) Total investment income for the first half of the year was HK$37.2 billion, +57.1% year-on-year. The annualized net return on investment was 3.47%, -0.16pct; the annualized return on total investment was 5.27%, +1.38pct year on year; the return on unannualized comprehensive investment was 5.58%, +2.62pct year on year (due to large fluctuations in the return on comprehensive investment, only unannualized data was disclosed). We believe that the sharp increase in comprehensive return on investment is mainly affected by the increase in the fair value of bonds under the FVOCI category.

The current stock price corresponding to 2024E PEV is only 0.17x. In the second half of 2024, China Taiping will adhere to the general requirements of the “five focuses” and be proactive in transforming methods, restructuring, improving quality and increasing efficiency, and promoting new breakthroughs in the high-quality development of the company. We are optimistic about the company's long-term development and resilience. We gave the company 0.20-0.22 times 2024 EPEV, corresponding to a reasonable value range of HK$12.17-13.39, maintaining a “superior to market” rating.

Risk warning: 1) Long-term interest rates are trending downward; 2) New premium growth falls short of expectations.