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中国财险(02328.HK):COR略有抬升 投资收益改善支撑净利润实现较好增长

China Financial Insurance (02328.HK): COR slightly raised investment income and improved net profit to achieve better growth

guolian ·  Oct 29, 2024 23:46

Key points of investment

China Financial Insurance released its 2024 three-quarter report. In the first three quarters, the company achieved original insurance premium income of 428.33 billion yuan, +4.6% year over year; realized net profit of 26.75 billion yuan, +38.0% year over year; and the comprehensive cost ratio was 98.2%, up 0.3 PCT year on year.

Car insurance COR improved year on year, and non-car insurance COR increased year on year. The company's overall COR for the first three quarters of 2024 was 98.2%, up 0.3 PCT year on year. Among them, the COR for car insurance and non-car insurance was 96.8%/100.5%, respectively, -0.6PCT/+1.9PCT year-on-year, respectively. Car insurance COR continues to improve. It is expected that the cost rate will improve year on year due to the implementation of “integrated reporting” for car insurance; non-car insurance COR will increase year over year, and it is mainly expected that disaster losses will increase year on year. On a quarterly basis, the 2024Q3 company's overall COR for a single quarter was 100.9%, up 0.3 PCT year on year (2024Q1/2024Q2 COR was 97.9%/95.7%, respectively, +2.2PCT/- 1.3PCT, respectively. The COR for the single quarter was calculated based on data under the accounting standards of Chinese enterprises). Among them, 24Q3 single-season car insurance and non-car insurance COR were 97.4% and 105.7%, respectively, -1.4PCT and +2.5PCT year over year, respectively. Car insurance COR continued to improve, and non-car insurance COR was under year-on-year pressure. Looking ahead, the company is expected to achieve the “car insurance COR of around 97%, and the non-car insurance COR < 100%” set at the beginning of the year in the context of “integrated reporting” of car insurance promoting cost rate improvement and the company's strengthening risk management and control to maintain a stable payout rate.

The year-on-year improvement in investment income led to a significant increase in net profit growth

In the first three quarters of 2024, the company achieved net profit of 26.75 billion yuan, +38.0% year-on-year. Among them, net profit for 2024Q3 was 9.293 billion yuan, +5966% year-on-year (2024Q1/2024Q2 was -38.3%/+17.4%, respectively. The net profit growth rates for the single quarter were all data under the accounting standards of Chinese enterprises). The company's net profit growth rate increased significantly from month to month, mainly due to the recovery in the equity market leading to a year-on-year improvement in investment income. The company's total investment income for the first three quarters of 2024 was 27.498 billion yuan, +70.4% year over year; the annualized return on investment was 5.9%, +2.3 PCT year on year, compared to 2024H1+1.5PCT. Looking ahead, the recovery in the equity market is expected to drive the company's investment income to continue to improve, which in turn will support the company's net profit growth for the full year 2024.

Investment advice: maintaining China's financial insurance “buy” rating

Considering that the implementation of “integrated reporting and banking” of auto insurance and the company's strengthening of risk management and control is expected to drive a year-on-year improvement in COR, and the recovery in the equity market is expected to lead to a positive year-on-year increase in investment income, we expect the company's net profit to mother in 2024-2026 to be 33.9/35.7/39.8 billion, respectively, with corresponding growth rates of 38%/6%/11%, respectively. Given the company's scarce business model and high ROE, we maintain a “buy” rating.

Risk warning: natural disasters exceed expectations; market competition intensifies; capital market fluctuates greatly

The translation is provided by third-party software.


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