Incident: China Taibao revealed 9M24 results. Net profit increased 65.5% year on year, and the investment side led to performance exceeding expectations. 9M24 achieved net profit to mother of 38.3 billion yuan/yoy +65.5%, and achieved net profit of 13.2 billion yuan/yoy +174% in a single quarter, which is expected to improve mainly due to investment side performance; achieved NBV 14.2 billion yuan/yoy +37.9%, NBV 5.2 billion yuan/yoy +75% in a single quarter; NBVM 20.1% /yoy+6.2 pct. COR 98.7% remained the same as in the same period last year; achieved a total/net return on investment of 4.7%/2.9% (unannualized), +2.3/ -0.1pct compared to the same period last year, respectively.

The volume and price of the life insurance business have risen sharply, and manpower indicators have steadily picked up. 9M24 achieved NBV 14.2 billion yuan/yoy +37.9%, NBV 5.2 billion yuan/yoy +75% in a single quarter; NBVM 20.1% /yoy+6.2pct in a single quarter, benefiting from the integration of banking insurance channels and continuous reduction in scheduled interest rates. The company's NBVM 24% /yoy+8.3pct in a single quarter in Q3 increased significantly.

Agent channel: 9M24 achieved a new policy premium of 33.8 billion yuan/yoy +16.3%, Q3 achieved a new policy premium of 9.3 billion yuan/yoy +37% in a single quarter, with an interim premium of 8.3 billion yuan/yoy +37%. The average monthly core workforce size is 0.058 million/ yoy +2.4%, and the monthly per capita first-year premium is 0.061 million/yoy +15%; the number of new employees added yoy is +15.5%, and the monthly first-year premium per capita yoy is +35%, which is a remarkable improvement and nurturing effect.

Banking insurance channel: 9M24 personal long-term insurance pays a premium of 10.2 billion yuan/yoy +23.2% for the new insurance period, and the Q3 single quarter banking insurance channel premium is 12.8 billion yuan/yoy +21.4%. It is expected that it will continue to benefit in the future in the context of integrated reporting and banking.

The growth rate of car insurance premiums has remained stable, and the non-car insurance business is expanding rapidly. 9M24 achieved car insurance premiums of 78.2 billion yuan/yoy +3.3%, and the company deepened “agricultural insurance +” product and service innovation to achieve non-car insurance premiums of 81.7 billion yuan/yoy +12.2%, with non-car insurance accounting for 51.1%/yoy+2.1pct. 9M24 COR was 98.7%, the same as the same period last year in the context of the catastrophe. 3Q24 underwriting loss was about 0.07 billion yuan, 0.71 billion yuan less than 3Q23. COR was 100.1% in a single quarter, and 1.4 pct was optimized year over year. It is expected that business expenses will continue to be optimized.

The investment side performed well due to the recovery in the capital market. 9M24's fair value change revenue was 42.1 billion yuan, a significant improvement over -1.9 billion yuan in the same period. It is expected to mainly benefit from the rapid recovery in the Q3 equity market. The 3Q24 fair value change revenue for a single quarter was 21.2 billion yuan, and 3Q23 was -7.3 billion yuan. The company achieved a total/net return on investment of 4.7%/2.9% (annualized), and achieved good investment performance compared to the same period last year. In the future, the company will continue to allocate equity investment types with undervalued, high dividends, and good long-term profit prospects. Q4 is expected to continue growing in anticipation of marginal improvements in the capital market.

Investment advice: Maintain the company's “Highly Recommended” rating. The company's performance in the third quarter grew steadily, and various business data were steady, moderate and positive. The performance base for the same period in the fourth quarter was low (4Q23 net profit of 4.1 billion yuan), and profit growth is expected to remain high throughout the year. Life insurance business: Core manpower has steadily rebounded, production capacity has increased, integration of reporting and interest rate cuts continue to drive debt-side cost optimization, and business value is expected to continue to increase. Financial insurance business: New energy vehicle insurance is expected to see a sharp rise in volume and price as the penetration rate of new energy vehicles increases. The company continues to promote refined management and optimization of the cost side, and the financial insurance business is expected to maintain steady growth. Asset side: The equity market is picking up, and investment income is expected to continue growing in the future with marginal improvements in the equity market against the backdrop of a low base during the same period. The net profit for 24-26 is estimated to be 45.7, 53.7, and 60.1 billion yuan, +60.1 billion yuan, +67.8% year-on-year, and 24-26 NBV is 15.3, 17.2, 19.1 billion yuan, +39.4%, +12.7%, and +10.8%, corresponding to 24-26E dynamic PEV valuations of 0.63, 0.57, and 0.52 times.

Risk warning: equity market fluctuations; frequent catastrophes; sales of new products fall short of expectations.