Ping An's first-quarter results show resilience in core lines, with Life VNB +20.7% YoY to RMB12.9bn under new EV assumptions, beating market consensus and our estimate of mid-teens growth. We see the uptick driven by a promising rise of VNB margin (+6.5 pct YoY) to 22.8% despite sluggish 2024 jumpstart sales. Group OPAT was down by 3.0% YoY to RMB38.7bn, significantly narrowing from -19.7% YoY by end-23. Noteworthily, Life & Health OPAT turned into an upswing by +2.2% YoY to RMB 27.3bn after a year of weakness, underpinning the +0.3% YoY OPAT growth of three core segments Ping An L&H, P&C and PAB (vs -2.8% YoY by end-23). Asset mgt. came out of the red by booking RMB910mn of net profit in 1Q24, versus RMB20.7bn of loss by end-23. Looking ahead, we expect the high base of new business sales since 2Q23 could be a factor tampering FYP and VNB growth in 2Q- 4Q24; yet notably improved product mix, agency productivity and bancassurance edge cannot be disregarded. We maintain a positive outlook on Ping An's VNB growth driven by improving margins, and expect OPAT losses in AM and Tech segments to progressively bottom out. Considering the impact of long-term interest rates in China on Ping An's interest income and equity market volatilities on its spread return, we revise down FY24-26E EPS to RMB6.42/RMB7.05/RMB7.61 vs prior est. RMB6.94/RMB7.87/RMB8.62 (link). Maintain BUY, with TP at HK$52.0, implying FY24E 0.47x P/EV and 0.71x P/B.

VNB +20.7% YoY driven by margin boost. Ping An L&H recorded +20.7% YoY increase in VNB to RMB12.9bn in 1Q24, beating our expectation of growth in mid-teens despite a sector-wide slowdown on new business sales during amid the 2024 jumpstart period. We see the growth a result of 1) a promising upturn in VNB margin by +6.5pct YoY to 22.8% benefiting from both the bancassurance repricing, and an optimized product mix shifting to protection- type and long-term savings with tax-deductible features; and 2) sustained solid growth of agent productivity, with VNB per agent +56.4% YoY in 1Q24 (1Q23: +37.2%). Despite a 4.0% decline in total no. of agents to 0.33mn from year- start, we see the proportion of "Talent+" new agents up by 11.0 pct YoY, implying high-quality recruitment. Apart from an exclusive partnership with PAB, the L&H entity expanded to external banks for widening channel capabilities as well. Looking ahead, we expect agency FYP to be the pillar of total FYP, likely contributing 73.6% by end-FY24 (CMBI est.), vs 71.6% by end- FY23; fluctuations on sales of bancassurance to flatten from 2Q24; and VNB growth to ease in 2Q-4Q24 due to a high base.

Steady growth of P&C with CoR up on rising claims. Ping An P&C steadily grew in size with insurance revenue +5.7% YoY to RMB80.6bn, and CoR +0.9pct to 99.6% in 1Q24. Excluding impacts of guarantee insurance, the adj. CoR came in at 98.4%, the same with year-start figure. The CoR increase was caused by 1) increased claims due to catastrophe, i.e. snowstorms, which grew the ratio by +2.0pct in 1Q24; and 2) economic recovery. P&C underwriting profit declined by 67.5% YoY to RMB323mn (CMBI calc.), partially attributed to a 14.3% YoY decrease in P&C OPAT. Considering the gap of change b/w two figures, we estimate that the P&C entity had better net investment result to compensate for underwriting losses. We expect to see more room for a CoR cut, given contracted guarantee insurance and rapid growth in A&H (+34.1%).

Valuation: The stock is now trading at FY24 0.47x P/EV and 0.71x P/B, with upside to be enhanced by 1) revived market sentiment, 2) rising investment yield, and 3) limited credit risk exposure to real estate industry, in our view. Considering the downside brought by declining long-term interest rates and equity volatilities, we revise down FY24-26E EPS to RMB6.42/RMB7.05/RMB7.61 versus prior est. RMB6.94/RMB7.87/RMB8.62 (link). Maintain BUY with TP at HK$52.0.

Risks: long-term interest rate continues in a downtrend; intensified equity market volatility, and agency new business growth falls short of our expectation.