Description of the event

China Life released its 2024 mid-year report, and the company achieved net profit of 38.278 billion yuan, up 10.6% year on year; new business value was 32.262 billion yuan, up 18.6% year on year (comparable caliber).

Incident comments

Improved return on investment led to a month-on-month increase in profit growth. In the first half of the year, the company achieved net profit of 38.278 billion yuan, a year-on-year increase of 10.6%, a significant improvement over the 9.3% decline in the first quarter. Improved asset-side performance is probably the main reason. In the first half of 2024, the company's total and net return on investment were 3.59% and 3.03% respectively, up from 3.23% and 2.82% in the first quarter.

The value of the new business is growing steadily. In the first half of the year, China Life Insurance's new business value of 32.262 billion yuan increased 18.6% year over year, down from 26.3% in the first quarter. The main reason was the increase in the base figure in the second quarter of last year. In terms of items, the improvement in value ratios is the main reason. Among them, premiums for new policies fell 6.4% year on year, which may be mainly affected by the implementation of integrated reporting through banking insurance channels and the reduction in pricing interest rates. The payment structure has improved. The share of new orders over ten years increased by 1.7 pct to 50.3% compared to the same period last year.

The team's production capacity continued to increase, and the scale stabilized. As of the first half of 2024, the size of the company's individual insurance team was 0.629 million people, up from 0.622 million people at the end of the first quarter to achieve stable scale. In terms of quality, production was also changed. First-year premiums per capita increased by 12.4% year on year. According to estimates, per capita NBV increased 12.5% year over year. Team income is also expected to improve, and team reform has achieved certain results. The company insists on effective teams to drive business development, further promote marketing system reform, and launch the “Seed Plan” to explore new marketing models. Currently, it has launched pilot projects in 24 cities, and it is expected that the trend of improving team quality will continue.

Investment advice: Recommended as a high-quality and highly elastic target. 1) On the debt side, the size of the company's agents is stabilizing and increasing production capacity, which is expected to effectively support future growth, and will benefit even more from the future trend of centralization. 2) Currently, the main contradictions in the industry focus on the asset side. As a pure life insurance company, China Life Insurance has the sensitivity and flexibility of the first tier in the industry and can be used as a high-quality beta asset allocation; 3) Leading life insurance has no substantial risk of interest differences. Currently, PEV is 0.64 times, and is still in the bottom range. If there is a lot of room for flexibility in market improvement, we will continue to focus on recommending.

Risk warning

1. Major adjustments to industry policies;

2. The equity market fluctuated greatly, and interest rates declined sharply.