Incident: Ping An of China released its 2024 semi-annual report. In 2024H1, the company achieved operating income of 494.966 billion yuan, +1.3% year-on-year; realized net profit to mother of 74.619 billion yuan, +6.8% year-on-year.

ROE (weighted) was 8.10%, +5.19% YoY. The three core businesses of life insurance and health insurance, property insurance, and banking totaled 79.565 billion yuan in operating profit attributable to shareholders of the parent company, +1.7% over the same period last year.

The life insurance and health insurance business continues to grow, and the insurance policy rate continues to improve steadily. The new business value of 2024H1's life insurance and health insurance business reached 22.32 billion yuan, +11.0% over the same period. Among them, the new business value of the agent channel was +10.8%, and the value of the new business per capita was +36.0%, showing the high quality development results of the agent channel. The continuation rate of life insurance policies improved significantly. The 13-month policy continuation rate was +2.8 pct year over year, and the 25-month policy continuation rate was +3.3 pct year over year.

The industrial insurance business grew steadily, and the comprehensive cost ratio was optimized year-on-year. With 2024H1, the company achieved revenue of 161.61 billion yuan from industrial insurance services, +3.9% year-on-year. Of these, premium income from auto insurance, health insurance, agricultural insurance, and corporate property insurance was 1048.24/10.09/7.349/6.202 billion yuan, respectively, +3.4%/+43.5%/+32.9%/+7.6% year-on-year, respectively. Ping An Insurance's overall comprehensive cost ratio was 97.8%, optimized by 0.2 pct over the previous year, mainly affected by the decline in underwriting losses in the guarantee insurance business.

The banking business operates steadily and promotes the high quality and sustainable development of retail business. Ping An Bank 2024H1 achieved net profit of 25.879 billion yuan, +1.9% year over year; core Tier 1 capital adequacy ratio of 9.33%, +0.11pct year on year; non-performing loan ratio of 1.07%, provision coverage ratio of 264.26%. As of the end of June 2024, retail assets under management were $4120.63 billion, +2.2% compared to the end of 23; personal deposit balance was $1290.345 billion, +6.9% compared to the end of 23.

The size of the insurance fund portfolio has expanded significantly, and the return on investment is stable. As of the end of June 2024, the size of the company's insurance capital portfolio was 5.2 trillion yuan, a significant increase of 10.2% over the beginning of the year; the annualized comprehensive return on investment was 4.2%, +0.1 pct.

Investment advice: Ping An of China's semi-annual results showed steady growth in revenue and net profit, and strong core business performance. The value of the new life insurance business has increased, the cost ratio of industrial insurance has been optimized, the banking business is stable, and the return on investment is stable. The company's 2024-2026 revenue is expected to be 991.28 billion yuan, 1077.659 billion yuan, and 1176.376 billion yuan, respectively, +8.48%, +8.71%, and +9.16%, respectively; net profit to mother is 96.918 billion yuan, 124.585 billion yuan, and 155.541 billion yuan, +13.14%, +28.55%, and +25.16% year-on-year.

EPS was 5.32, 6.84, 8.56 yuan/share, and PE corresponding to the closing price on September 2, 2024 was 8.16, 6.35, and 5.07 times. Maintain a “buy” rating.

Risk warning: risk of long-term interest rate decline, risk of changes in regulatory policies, equity market turbulence