Incident: The company disclosed its 2024 quarterly report. 2024Q1 achieved operating income of 121 billion yuan (YoY +14.4%), net profit to mother of 20.6 billion yuan (YoY -9.3%), and earnings per share of 0.73 yuan (YoY -9.3%); NBV was +26.3% year-on-year, reaching the highest growth rate in recent years.
The quality of business has improved significantly, driving NBV to achieve relatively rapid growth. The company achieved premium revenue of 337.6 billion yuan (YoY +3.2%) in 2024Q1, of which 112.4 billion yuan (YoY -4.4%) of new insurance premiums were implemented, mainly due to the integration of reporting banks and the decline in the volume of banking insurance channel transactions. Benefiting from product restructuring, etc., the company's new single premium payment ratio was +4.7%, and the new single term premium payment for a ten-year term or more was +25.4%, driving the company's NBVM to be effectively improved, which in turn led to a year-on-year ratio of +26.3% compared to 2023Q1 after the same caliber reset.
The scale of manpower declined slightly, and the quality of the team improved markedly. By the end of 2024Q1, the company's total sales manpower/personal insurance sales workforce was 679,000/622,000 respectively. Compared with the same period of the previous year — 43,000/- 40,000 people, compared with the end of the previous year — 15,000 people — 12,000 people, the size of the workforce is expected to gradually stabilize. The number and proportion of people with excellent performance in the company increased. The monthly first-year premium payment ratio per person in the Q1 insurance sector was +17.7%. The quality of the team continued to improve, and the team production capacity achieved continuous growth.
The scale of investment has been growing steadily, and investment returns are under pressure. As of the end of 2024Q1, the company's investment assets reached 5931.9 billion yuan, +4.8% compared to the end of the previous year. Affected by declining interest rates and increased equity market fluctuations, 2024Q1 achieved a total investment income of 64.7 billion yuan (YoY +7.2% under the same caliber) and a net investment income of 42.7 billion yuan (YoY -0.1% under the same caliber); the total return on investment was 3.23%, and the net return on investment was 2.82% (based on a simple annualized calculation).
Investment advice: Maintain a Buy-A investment rating. We expect China Life Insurance's 2024-2026 EPS to be 1.86 yuan, 2.06 yuan, and 2.34 yuan (based on the new guidelines), giving 0.75x2024 p/EV, corresponding to a 6-month target price of 35.29 yuan.
Risk warning: large fluctuations in the equity market, uncertainty in regulatory policies, continuing decline in the number of agents, etc.