The low base+investment performance was outstanding, and the performance far exceeded expectations. China Life Insurance achieved net profit of 104.523/66.245 billion yuan in the first three quarters/Q3, YOY +173.9%/+1767.1%, which greatly exceeded our expectations. Benefiting from the recovery in the stock market, the company's total investment income surged 152.4% year-on-year to 261.419 billion yuan in the first three quarters; among them, the profit and loss from fair value changes in the first three quarters yoy was +8008.5% to 147.655 billion yuan, which is the core driving force for the high increase in total investment income.

The growth rate of NBV exceeded expectations, and the inflection point in agent size was further consolidated. In the first three quarters, the company's NBV yoy was +25.1%, exceeding our expectations (we expect yoy +18.9%), and the year-on-year growth rate was a further 6.5 pct higher than the 1H24 level. 1-3Q24's new premium growth rate was corrected, yoy +0.4% to 197.509 billion yuan. The year-on-year growth rate was 6.8pct higher than the 1H24 level. Benefiting from the release of customer demand brought about by a low base and falling predetermined interest rates, premiums for new orders surged 46.4% year-on-year to 37.243 billion yuan in Q3; among them, first-year premiums yoy +85.5% to 15.89 billion yuan, and first-year premiums of 10 years or more yoy +74.9% to 9.94 billion yuan. The delivery structure continued to improve. First-year premiums of 10 years or more in the first three quarters accounted for yoy+3.9 pct to 26.6% of new orders. By the end of September, the company's total sales manpower/personal insurance sales force reached 0.694/0.641 million people, qoq +1.3%/+1.9%, and the month-on-month growth rate was further increased by 0.4 pct/0.8 pct compared to the 1H24 level; the team structure continued to be optimized, the scale and proportion of high-performance manpower increased, process indicators continued to improve, and the monthly first-year premium per capita yoy +17.7%. The pilot of a new marketing model for individual insurance progressed rapidly, and the “Seed Program” was piloted in 24 cities including Nanjing and Shenzhen, with initial results.

The asset side significantly benefited from the stock market rebound, and FVOCI's equity size increased by 13.4 billion yuan month-on-month. By the end of September, the company's total investment assets were 6.36 trillion yuan, up 12.3% from the beginning of the year; in the first three quarters, the company achieved an annualized net/total return on investment (annualized only interest income from fixed maturing assets and rental income from investment real estate) of 3.26%/5.38%, -0.55pct/+2.57pct year over year. The equity market showed impressive performance, and FTPVL asset-driven profit increased year-on-year. By the end of September, assets classified as AC/FVOCI/FVTPL accounted for 3.5%/61.5%/35.0% of the company's financial assets, respectively, -0.9pct/+1.5pct/ -0.5pct from the end of June level. Among them, the FVOCI equity scale was 151.4 billion yuan, up 9.7% from the level at the end of June, an increase of 13.4 billion yuan.

Investment analysis opinion: maintain the “buy” rating and raise profit forecasts. The performance of the three-quarter report was impressive. Under the new accounting standards, we expect net profit to be 118.7/123.1/144.3 billion yuan for 24-26, respectively (previously, the forecast was 28.7/35.9/45.8 billion yuan under the original accounting standards). As the “head geese” of life insurance, the company is expected to be the first to benefit from the accelerated optimization trend of the industry competition pattern and the implementation of regulatory support policies in the next stage. The company continues to push forward life insurance reforms, and results are expected to continue to show. As of November 4, the corresponding PEV (24E) stock price was 0.87x, maintaining a “buy” rating.

Risk warning: Long-term interest rates are declining, equity market fluctuations, regulatory policies are becoming stricter, and sales of new products fall short of expectations.