CHINA LIFE(2628.HK):4Q NET LOSS MARKEDLY NARROWED; VNB GREW IN LOW-TEENS DESPITE REVISED EV ASSUMPTIONS
CHINA LIFE(2628.HK):4Q NET LOSS MARKEDLY NARROWED; VNB GREW IN LOW-TEENS DESPITE REVISED EV ASSUMPTIONS
China Life disclosed full-year results with net profit attributable to shareholders amounted to RMB 46.2bn (-30.7% YoY), equivalent to RMB 10.6bn net profit in 4Q23 (-4.7% YoY), significantly narrowed from -103.8% YoY to a net loss of RMB 610mn in 3Q23 (IFRS-based). The contraction in 4Q net loss outpaced expectation given the equity market movements exacerbated in 4Q23, evidenced by the CSI 300/SHCOMP -7.0%/-4.4% YoY in 4Q23, vs -4.4%/-2.9% YoY in 3Q23 (Fig. 5). We regard the narrowing quarterly loss a mix of: 1) strong rebound in insurance revenue by +32.6% in 2H23 (+68.2% YoY in 4Q23), underpinned by RMB 44.1bn contractual service margin release (+103.4% YoY) in 2H23, and 2) contracted net investment loss to c.RMB3.7bn in 4Q23, from c.RMB18.2bn in 3Q23 (Semi-Q). Despite EV revisions, the insurer sustained low-teen VNB growth by +11.9% YoY to RMB36.9bn (vs old assumptions: +14.0% YoY to RMB 41.0bn), and EV by +5.6% to RMB1.26tn (vs old: +5.1% YoY to RMB1.29tn). We anticipate the one-off impact of EV assumptions change will not affect the insurer's value generation, and expect net investment results to turn positive in 1H24 given better index performances in 1Q24 and increased fund proportions to bonds (55.8%), which is likely to yield for higher spread income within a low interest environment. Concerning pressured investment yield (<3%, Fig 8) and depressed sentiment, we derive our new target price under new IFRS standards at HK$13.7, implying 0.3x FY24E P/EV based on P/EV-RoEV, cross-checked with DDM. Maintain BUY. n Solid underwriting underpins insurance revenue. The life insurer sustained resilient operating growth given the first-year premium (FYP)/first-year regular premium (FYRP) and 10yrs+ FYRP +14.1%/+16.7%/+18.4% YoY in 2023. Of which, agency FYP/agency FYRP grew by +10.8%/+12.6% to RMB110.4bn/ RMB91.8bn, with the 10yrs+FYRP making up to 53.9% of the channel's FYRP, reflecting an optimized structure tilting towards long-term protection policies. Agency VNB +10.4% to RMB34.6bn implying strengthened VNB margin (FYP basis) to 29.9% (vs FY22: 27.4%) by end-2023. Bancassurance accumulated growth with the channel's FYP/FYRP/5yrs+FYRP +49.3%/+39.4%/+53.1% YoY. Other VNB, primarily contributed by bancassurance, jumped 42% YoY to RMB 2.21bn. With increased productivity to further unleash, we expect VNB to rise in the mid-teens in FY24, driven by both FYP and margin increases.
中國人壽披露全年業績，歸屬於股東的淨利潤爲人民幣462億元（同比下降30.7％），相當於23年第四季度的人民幣106億元淨利潤（同比下降4.7％），從同比-103.8％大幅縮小至23年第三季度的淨虧損6.1億元人民幣（基於國際財務報告準則）。鑑於23年第四季度股市走勢加劇，第四季度淨虧損的收縮超過了預期，中證300/上海證券交易所指數在23年第四季度同比下降7.0％/-4.4％，而23年第三季度同比下降4.4％/-2.9％（圖5）。我們認爲，季度虧損的收窄包括：1) 23年下半年保險收入強勁反彈+32.6％（43年第四季度同比增長68.2％），這得益於23年下半年公佈的441億元人民幣合同服務利潤率（同比增長103.4％）；2）合同淨投資虧損從23年第三季度的182億元人民幣降至43年第四季度的人民幣37億元（Semi-Q)。儘管對電動汽車進行了調整，但該保險公司的VNB同比增長了11.9％，至369億元人民幣（相比之前的假設：同比增長14.0％至410億元人民幣），電動汽車增長+5.6％，至1.26萬億元人民幣（相比舊值：同比增長5.1％，至1.29萬億元人民幣）。我們預計，電動汽車假設變更的一次性影響不會影響保險公司的價值創造，並預計，鑑於24年第一季度指數表現好轉，基金佔債券的比例增加（55.8％），淨投資業績將在24年上半年轉爲正數，債券在低利率環境下可能會帶來更高的利差收益。關於投資收益率壓力（
EV assumptions chg. left limited impact to VNB growth. China Life revised down key EV assumptions, in line with industry, with the long-term investment return -50bps to 4.5% and the risk discount rate (RDR) -200bps to 8%, landing at the low-end of the industry average (8%-10%). The refinements cut VNB by -10.2% to RMB36.86bn (+11.9% YoY), vs RMB41.04bn (+14.0% YoY) based on end-2022 assumptions, and EV by -2.5% to RMB 1.26tn (+5.6% YoY), vs RMB 1.29tn (+5.1%YoY). A write-off of RMB40.6bn was recorded to reflect the chg. (-3.3% to EV) and negative investment variances (-6.0% to EV), jointly resulted a FY23 ROEV at 3.4% (CMBI est). We expect the negative impact to be one-off and the revision allows better EV comprehension to macro exposure.
電動汽車的假設對VNB增長的影響有限。中國人壽下調了電動汽車的關鍵假設，與行業一致，長期投資回報率-50個點子至4.5％，風險折現率（RDR）-200個點子至8％，降至行業平均水平（8％-10％）的低端。根據2022年底的假設，細化將越南國民銀行從410.4億元人民幣（同比增長14.0％）減少了-10.2％，至人民幣368.6億元（同比增長11.9％）；電動汽車從1.29萬億元人民幣（同比增長5.1％）下降-2.5％，至1.26萬億元人民幣（同比增長5.6％）。註銷了406億元人民幣，以反映差異（電動汽車爲-3.3％）和負投資差異（電動汽車爲-6.0％），共同導致23財年的投資回報率爲3.4％（CMBI估計值）。我們預計負面影響將是一次性的，修訂版可以更好地理解電動汽車對宏觀風險敞口。
Pressured investment still a key concern to valuation. The insurer ended at 2.43% total investment yield and 3.70% net investment yield by end 2023, - 1.47pct / -0.26pct YoY to prior year under restated new IFRS basis. The stock is now trading at 0.2x FY24E P/EV and 0.5x FY24E P/B, reflecting continued depressed sentiment given a downward-trending 10-year govt. bond yield to less than 2.3% (Fig. 9). Despite a cross-sector guide-down on LT investment return to 4.5%, concerns on macro headwinds weigh on the insurer's portfolio, of which 76% to fixed-income assets incl. cash, and contract H-share valuation. With respect to asset pressure and actuarial chg. on underlying assumptions, we adjust our target price based on P/EV-RoEV based on Gordon Growth and cross-check with the Dividend Discount Model (DDM). The new TP is HK$13.7, implying 0.3x FY24E P/EV, and 0.7x FY24E P/B (Fig. 5). Maintain BUY rating.
受壓的投資仍然是估值的關鍵問題。根據重申的新國際財務報告準則，截至2023年底，該保險公司的總投資收益率爲2.43％，淨投資收益率爲3.70％，同比下降1.47個百分點/-0.26個百分點。該股目前的交易價格爲 FY24E 市盈率的0.2倍，FY24E 市盈率爲0.5倍，這反映了10年期政府債券收益率下降至2.3％以下（圖9）的情況下情緒持續低迷。儘管跨行業將長期投資回報率下調至4.5％，但對宏觀不利因素的擔憂打壓了該保險公司的投資組合，其中76％來自固定收益資產，包括現金和合約H股估值。在資產壓力和精算變化方面，根據基本假設，我們根據Gordon Growth的p/ev-ROEV調整目標價格，並與股息折扣模型（DDM）進行交叉覈對。新的目標價爲13.7港元，意味着 FY24E 市盈率爲0.3倍，FY24E 市盈率爲0.7倍（圖5）。維持買入評級。
譯文內容由第三人軟體翻譯。