CPIC turned to positive VNB growth by +30.7% YoY in 1Q24, outpacing peers i.e. China Life / Ping An +26.3%/+20.7% YoY in the corresponding period (link/link). The strong VNB momentum was driven by margin expansion to an est.15.8%, +3.7pct YoY (CMBI est), and a slight increase in FYP by 0.4% YoY to RMB32.8bn (Fig.3). The Group's net profit to S/H grew by +1.1% YoY to RMB 11.8bn in 1Q24, surpassing peers being the first among listed CN insurers to realize positive net profit growth. We see the insurer's life underwriting focus reverted back to agency with the agency FYRP/FYSP +25.4%/+44.5% in 1Q24, whereas in 4Q23 was - 3.6%/-53.6% YoY. These enhanced the rally in agency FYP by +31.3% YoY to RMB16.1bn, shifting from a -21% decline in 4Q23. Bancassurance was another story, still consuming impacts on the tightened oversight since last fall. The channel's FYP was -21.8% YoY in 1Q24, although narrowed from a -54.6% decline in 4Q23 (Fig 3). We view the improved first-quarter print a head of steam built-up upon the proceeding Changhang Transformation, which has been initiated in 2022. We think the regulatory impact on bancassurance will gradually fade out after the lacklustre 4Q23 & 1Q23 prints. For P&C, CoR dropped by -0.4pct to 98%, with premium rise driven by non-auto segment. We stay overweight on the insurer's resilience and think the effective chg. of Changhang could deliver strong efficiency gains over quarters. We adjust our TP to HK$24.8, implying 0.4x FY24E P/EV.

Life focus back to agency; banca to face high base in 2Q24. Despite the bancassurance FYP cut by -21.8% YoY, the insurer managed to lifting total FYP by +0.4% YoY to RMB32.8bn, outweighing listed peers i.e. China Life/Ping An Life/New China Life's 1Q24 FYP was down by -4.4%/-13.6%/-45.0% YoY. The uptick was driven by a shift of focus back to agency, where the channel's FYRP/FYSP +25.4%/+44.5% YoY in 1Q24, pulling an FYP increase by +31.3% (Fig.3). VNB achieved better-than-expected growth by +30.7% to RMB 5.2bn, partially thanks to contracted proportions of bancassurance sales. We estimate the margin (FYP basis) rose to 15.8%, +3.7pct YoY in 1Q24. Given a high base of bancassurance biz since 2Q23, we think CPIC may persist on strengthening agent productivity and group insurance to balance out growth. Looking ahead, we expect more upside on the insurer's margin expansion given progressive advancement on Changhang, which addressed on quality growth and stabilized contributions from bancassurance as regulatory impact gradually bottomed out.

1Q24 net profit turnaround; eyes on investment. The insurer showed resilient profitability as the Group's net profit to S/H +1.1% YoY to RMB11.8bn in 1Q24, suggesting a turnaround after declines for three consecutive quarters since 2Q23 . The print topped main peers as China Life /Ping An/New China Life still entangled with a net profit decline by-9.3%/-4.3%/-28.6% YoY respectively in 1Q24. Net investment results slid by -26.1% YoY due to drops in net interest income (-5.9%) and investment income turning from RMB1.1bn gain in 1Q23 to RMB1.5bn loss in 1Q24, offsetting the fair value gain of +23.8%.

New TP at HK24.8. The stock is trading at FY24E 0.3x P/EV and 0.6x P/BV. We adjust our TP based on SOTP, with Life EV reflecting on sensitivity changes under the new actuarial assumptions (@9%, 4.5%) by end-23 . Maintain BUY. New price target implies 0.4x FY24E P/EV and 0.84x FY24E P/BV .