[Incident] China Life Insurance announced its results for the first quarter of 2024: China Life Insurance began implementing the new accounting standards in 2024. Net profit due to 2024Q1 was 20.6 billion yuan, -9.3% year-on-year; net assets returned to the mother at the end of Q1 were 480.4 billion yuan, +46.6% compared to the beginning of the year, mainly affected by changes in accounting standards and total comprehensive income during the reporting period.
Life insurance: The new order structure has improved significantly, and NBV has achieved the highest growth in recent years under a comparable caliber. 1) The premium structure for the new order has been significantly optimized. Premium premiums for the first quarter were 112.4 billion yuan, -4.4% year-on-year. Among them, first-year premiums were 74.8 billion yuan, +4.7% year-on-year; premiums paid for 10 years or more were 25.2 billion yuan, +25.4% year-on-year, accounting for 33.7% of first-year payments, an increase of 5.6 pcts over the previous year. 2) Driven by the rapid growth of medium- to long-term futures trading business, cost reduction and efficiency, NBV was +26.3% year-on-year in the first quarter, the highest growth rate in recent years. We expect the company's NBV margin to also increase significantly.
Manpower: The number and quality of the agent team has increased steadily, and production capacity per capita has increased significantly. 1) The team size stabilized and consolidated the trend.
The total manpower for 2023Q1 and the end of 2023 was 722,000, 694,000, and 679,000 respectively, -6.0% year-on-year and -2.2% compared to the beginning of the year. 2024Q1 The number of individual insurers in 2023Q1 and the end of 2023 was 662,000, 634,000, and 622,000, respectively, -6.0% year-on-year, and -1.9% compared to the beginning of the year. 2024Q1 2) The quality of the team has improved markedly.
The number and proportion of people with excellent performance continued to increase, team production capacity continued to grow on a high base, and first-year premiums per person per month of insurance were +17.7% year-on-year.
Investment: The size of assets has grown steadily, and the return on investment has declined under an incomparable scale. 1) Investment assets reached 5931.9 billion yuan, +4.8% compared to the beginning of the year. 2) Total investment income reached 64.7 billion yuan, +7.2% year-on-year under the same caliber, and net investment income of 42.7 billion yuan, or -0.1% year-on-year. The simple annualized net return on investment was 2.82%, and the total return on investment was 3.23%. The data for the same period last year were 3.62% and 4.21%, respectively, but due to differences in guidelines, direct comparison is inappropriate.
The valuation is still low, and the rating is “superior to the market”. We believe that the company focuses on the “Eight Major Projects” and continues to implement the “Strong Sales Channel Project” to further push forward the reform of the marketing system, and is expected to maintain steady operation and stabilize its dominant position in the market in the future. As of April 26, 2024, the company's stock price corresponds to 2024E PEV 0.6x. We gave 0.75-0.80 times 2024E PEV, a reasonable value range of 36.58-39.02 yuan, and a “superior to the market” rating.
Risk warning: Long-term interest rates are trending downward; new premium growth falls short of expectations.