Incident: Ping An of China disclosed 9M24 results. NBV and net profit increased by more than 30% year-on-year, and steady growth in core business was in line with expectations. 9M24 achieved operating profit of 113.8 billion yuan/yoy +5.5%, of which the three core businesses achieved operating profit of 119.7 billion yuan/yoy +5.7%; net profit to mother of 119.2 billion yuan/yoy +36.1%, of which 3Q24 achieved 44.6 billion yuan/yoy +151.4%. 9M24's life insurance and health insurance business achieved NBV 35.2 billion yuan/yoy +34.1%, 3Q24 NBV 12.8 billion yuan/yoy +110.2%; COR 97.8%/yoy-1.5pct; annualized comprehensible/net investment return 5.0%/3.8%, +1.3/ -0.2pct, year-on-year respectively.

The number of agents rebounded sequentially for two consecutive quarters, and the results of the high-quality development of life insurance channels were outstanding. 9M24's life insurance and health insurance business achieved NBV 35.2 billion yuan/yoy +34.1%, 3Q24 NBV 12.8 billion yuan/yoy +110.2%; NBVM (first year premium) 25.4% /yoy+7.3pct. In the first three quarters, customers enjoying health care service rights contributed 69.6% /yoy+0.8pct of NBV, and pension rights contributed 39% /yoy+9.5pct. The contribution of value-added services to the new life insurance business value continued to increase. The agent channel NBV was 31.6%, maintaining rapid growth, with NBV yoy +54.7% per capita; as of the end of September, the number of agents rebounded 0.362 million/ qoq +6.5% for two consecutive quarters (qoq +2.1% in the second quarter), with new manpower “excellent +” accounting for yoy+4pct. Banking insurance channel NBV yoy +68.5%, external channel production capacity yoy +77%, bank insurance accounts for 18.8% /yoy+2.4pct of NBV from other channels. It is expected that thanks to lower predetermined interest rates and integration of banking insurance channel reporting, etc., the volume and price of the life insurance business will rise sharply. Q4 The NBV base was low in the same period last year. It may accelerate further this year, and NBVM will continue to be optimized as the integration of reporting banks progresses.

The financial insurance business grew steadily, and the quality of the business continued to be optimized. 9M24's financial insurance business insurance service revenue is 246 billion yuan/yoy +4.5%; operating profit is 14 billion yuan/yoy +39.7%. The company guarantees that insurance business underwriting losses declined sharply year-on-year, and business quality continued to be optimized. COR 97.8%/yoy-1.5pct, of which car insurance COR 98.2%/yoy+0.8pct, was mainly due to the reduced discount rate of the new guidelines, increased debt costs, and the impact of catastrophes. As the business structure continues to improve and the peak of the disaster period passes, COR is expected to continue to improve in the future.

The investment-side capital market picked up, and investment income in a single quarter increased more than 2 times year on year. 9M24 achieved annualized comprehensible/net investment income of 5.0%/3.8%, +1.3/ -0.2pct year-on-year respectively, and achieved an investment income of 125.4 billion yuan/yoy +232%. The capital market rebounded rapidly, mainly due to favorable policies in the third quarter. The company's portfolio size was 5.32 percent, +12.7% compared to the beginning of the year, of which the real estate balance was 205 billion yuan, accounting for 3.9%/qoq-0.1 pct. The scale continued to drop in pressure and the share of real estate investment measured using the cost method was 80.6%/qoq+1.5pct. The structure continued to be optimized, and the risk was manageable.

Investment advice: Maintain the company's “Highly Recommended” rating. The company's performance grew steadily, life insurance NBV maintained a high growth rate under a high base, the team achieved high-quality development, and the banking insurance channel value transformation achieved remarkable results. The performance of investment-side equity assets improved markedly compared to the same period last year. Significant improvements in profit and loss from changes in fair value led to a significant increase in Q3 profits. Value and profit growth is expected to continue to accelerate in Q4 against the backdrop of continued cuts in scheduled interest rates in the second half of the year, a low profit base for the same period, and a sharp improvement in equity market margins (4Q23 net profit was negative). At the same time, the equity market is picking up, and OPAT's growth rate is expected to increase further, driving dividend and dividend growth. The net profit for 24-26 is estimated to be 126.3, 151.3, and 177 billion yuan, +47.5%, +19.8%, and +17.0% year-on-year, 24-26 NBV is 53.3, 60.3, 67.6 billion yuan, +35.8%, +13.0%, and +12.2%, corresponding to 24-26E dynamic PEV valuations of 0.68, 0.64, and 0.60 times.

Risk warning: equity market fluctuations; sales force development falls short of expectations; sales of new products fall short of expectations.