occurrences

Ping An of China released its 2024 three-quarter report. In the first three quarters, the company achieved NBV of 35.16 billion yuan, up 34.1% year on year; net profit to mother was 119.182 billion yuan, up 36.1% year on year; and operating profit to mother was 113.818 billion yuan, up 5.5% year on year.

Net profit and operating profit growth rates continued to increase month-on-month

1) 9M2024 achieved net profit of 119.182 billion yuan, +36.1% year-on-year (2024Q1/2024Q2/2024Q3 were -4.3%/+20.4%/+151.3%, respectively), and the growth rate continued to increase month-on-month. By business, net profit from life insurance, health insurance, financial insurance, banking, asset management, and financial enablement businesses was +35.0%, +39.7%, +0.2%, and losses narrowed and +475.0% year-on-year, respectively. Among them, the net profit from the financial enablement business improved significantly. It was mainly owned by Lujin and brought in a one-time income of 12.755 billion yuan. 2) 9M2024 achieved operating profit of 113.818 billion yuan, +5.5% year-on-year (2024Q1/2024Q2/2024Q3 were -3.0%/+1.9%/+22.1%, respectively), and the growth rate continued to improve month-on-month. By business, operating profits from life insurance, health insurance, financial insurance, banking, asset management, and financial enablement businesses were +3.0%, +39.7%, and +0.2% year-on-year, respectively, and losses narrowed to -83.7%. Among them, the performance of life insurance, health insurance, financial insurance, and banking businesses was relatively steady. 3) The net annualized and comprehensive return on investment of 9M2024 was 3.8% and 5.0% respectively, -0.2PCT/+1.3PCT year-on-year respectively. The company's comprehensive return on investment improved markedly.

Life insurance NBV continued its positive growth trend, with financial insurance COR improving 1) 9M2024 achieved NBV 35.16 billion yuan, +34.1% year over year (+20.7% /flat/+110.3% for 2024Q1/2024Q2/2023Q3, respectively). The company's NBV growth rate increased month-on-month. It is expected that NBV Margin will improve year-on-year due mainly to another reduction in scheduled interest rates, and a positive year-on-year increase in premiums for new orders. 9M2024's NBV margin was +7.3PCT to 25.4% year over year, of which the 2024Q3 single quarter's NBV margin was +7.9PCT year over year. 9M2024's new policy premiums were -4.2% to 138.624 billion yuan, of which the 2024Q3 single quarter's new premiums were +50.4% year-on-year.

2) As of 2024Q3, the number of company agents was 0.362 million, an increase of 0.022 million over 2024H1, and the number of the company's agents rebounded steadily. At the same time, the NBV per capita of 9M2024's agent channel was +54.7% year-on-year, and agent quality continued to improve. 3) 9M2024's financial insurance COR was 97.8%, an improvement of 1.5PCT over the previous year. Among them, car insurance COR was 98.2%, up 0.8 PCT year over year. The company's non-car insurance COR improved year-on-year, mainly due to a significant improvement in guarantee insurance COR.

Profit Forecasts and Ratings

Considering that the recovery in the capital market has led to an improvement in the company's investment income, we expect the company's income from 2024-2026 to 552.3/584.8/620.1 billion, with corresponding growth rates of +3%/+6%/+6%, respectively; net profit to mother is 133.5/150.5/172 billion, respectively, with corresponding growth rates of +56%/+13%/+14%, respectively. In view of the good performance of the company's main financial business, we believe that from a medium- to long-term perspective, the company still has high investment value and maintains a “buy” rating.

Risk warning: Economic recovery falls short of expectations, capital market volatility intensifies, and customer demand is slowing down.