\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 318 Ping An Insurance (Group) Company Of China Ltd(601318) )
Key points
Event: in 2021, Ping An Insurance (Group) Company Of China Ltd(601318) operating revenue was 1.2 trillion yuan, a year-on-year increase of – 3.1%; The net profit attributable to the parent company was 101.62 billion yuan, a year-on-year increase of – 29.0%; The operating profit attributable to the parent company was 147.96 billion yuan, a year-on-year increase of + 6.1%; Operating roe18 9%, year-on-year -0.6pct; The value of new business was 37.9 billion yuan, a year-on-year increase of – 23.6%; The group’s embedded value was 139551 billion yuan, up + 5.1% from the beginning of the year; The dividend per share was 2.38 yuan, a year-on-year increase of + 8.2%.
Comments:
Why did net profit decline—— Mainly due to China Fortune Land Development Co.Ltd(600340) impairment provision, capital market fluctuation and market interest rate decline, which have a negative impact on investment income. In 2021, the operating profit attributable to the parent company increased by 6.1% year-on-year to 147.96 billion yuan, of which 21q4 was – 5.0% year-on-year; The net profit attributable to the parent decreased by 29.0% year-on-year to 101.62 billion yuan, of which 21q4 was – 50.1% year-on-year, which was mainly affected by the provision for impairment of China Fortune Land Development Co.Ltd(600340) investment assets and the decline of investment income under the environment of capital market fluctuation and market interest rate decline, of which the net profit of life insurance was – 37.4% year-on-year. Excluding the impact of China Fortune Land Development Co.Ltd(600340) investment asset impairment provision, the operating profit attributable to the parent company was + 11.3% year-on-year, with a growth rate of 7.0pct lower than that of 21h1, and the net profit attributable to the parent company was – 12.0% year-on-year, with a growth rate of 26.7pct lower than that of 21h1.
Life insurance: the agent continued to be clean, NBV was under pressure, and the remaining marginal balance fell, but EV increased steadily. In 2021, the company’s life insurance business scale premium income was 567.28 billion yuan, a year-on-year decrease of 5.4%, of which 21h2 income was 229.4 billion yuan, a year-on-year decrease of 6.1%.
(1) the decline of agents accelerated. In 2021, the company continued to deepen the reform of life insurance channels and accelerate the clearing up of agents. By the end of 2021, the number of personal life insurance sales agents was Shanghai Pudong Development Bank Co.Ltd(600000) , a year-on-year decrease of 41.4%, an increase of 8.7pct compared with the end of the third quarter of 2021; The monthly average number of agents in 2021 was 796000, a year-on-year decrease of 24.5%, an increase of 9.4pct compared with 21h1. Although the continuous loss of agents will have a certain negative impact on the company’s performance, with the recruitment and cultivation of high-quality agents, the improvement of the quality of agent teams (such as diamond teams) will drive the recovery of performance in the future.
(2) the sales of high value rate business is weak, the product structure is adjusted, and NBV is under pressure. Affected by the loss of agents, in 2021, the company’s first year premium used to calculate the value of new business decreased by 8.5% year-on-year to 136.29 billion yuan, of which 21q4 was – 25.1% year-on-year and – 20.5% month on month; At the same time, under the influence of the uncertain economic situation outside China and the regional recurrence of the epidemic, the sales of long-term security products with high value rate are weak, while the proportion of savings products with relatively stable income but low nbvm is increased. In 2021, nbvm decreased by 5.5pct to 27.8% year-on-year, and 2.9pct compared with the first three quarters; The double decline of FYP and nbvm led to the company’s NBV falling by 23.6% year-on-year to 37.9 billion yuan in 2021 (excluding the impact of hypothetical adjustment, year-on-year – 18.6%), of which 21q4 was – 60.5% year-on-year and – 66.1% month on month.
(3) the growth rate differentiation of agent’s per capita FYP and per capita NBV. Due to the lack of manpower, the FYP per agent of the company increased by more than 22% year-on-year in 2021, which was basically stable compared with 21h1; However, the sharp decline of NBV caused the NBV per capita to decline by 4.1% year-on-year to 39000 yuan per capita per year, and the growth rate was 4.8pct lower than that of 21h1.
(4) the remaining marginal balance is – 4.1% compared with the beginning of the year, and EV is + 6.3% compared with the beginning of the year. By the end of 2021, the remaining marginal balance of the company’s life insurance and health insurance business was 940.73 billion yuan, down 2.0% from the beginning of the year. It was mainly affected by the withdrawal difference caused by the gradual withdrawal of unpaid customers in the early stage. The surrender rate in 2021 was 2.23%, down 0.5pct year-on-year. However, ev increased by 6.3% to 876.49 billion yuan from the beginning of the year, driving the group’s EV to increase by 5.1% to 1.4 trillion yuan from the beginning of the year.
We believe that the company is currently in the deep-water area of life insurance channel reform. With the overall improvement of the quality of the agent team in the future and the continuous adjustment of the business structure (such as promoting the sales of savings products and accelerating the layout of the elderly care industry), the pressure on the life insurance business is only temporary.
Property insurance: both auto insurance and non auto insurance businesses achieved marginal improvement, and the comprehensive cost rate was -1.1pct year-on-year.
(1) the decline of premium narrowed, and both auto insurance and non auto insurance businesses achieved marginal improvement. In 2021, the company’s property insurance premium income decreased by 5.5% year-on-year to 270.04 billion yuan, a decrease of 3.6pct narrower than that in the first three quarters. Specifically, in 2021, the company’s auto insurance business fell by 3.7% year-on-year to 188.84 billion yuan, of which 21q4 was + 8.7% year-on-year and + 14.9% month on month. The pressure of comprehensive reform of auto insurance has been alleviated to a certain extent; Non auto insurance premiums fell 19.4% year-on-year to 58.59 billion yuan, which is expected to be mainly affected by the company’s clearing of stock risks and the year-on-year decline of guaranteed insurance premiums by 51.6%. However, the decline of non auto insurance premiums in 2021 narrowed by 1.7 PCT compared with the first three quarters, realizing marginal improvement; Accident and health insurance premiums increased by 32.6% year-on-year to 22.62 billion yuan, of which 21q4 was + 35.1% year-on-year.
(2) the comprehensive cost rate decreased by 1.1pct year-on-year. Affected by the rainstorm and other natural disasters in Henan, the company’s loss ratio increased by 6.5pct to 67.0% year-on-year in 2021. However, the company enabled the main business of finance through digitization, optimized business quality and realized cost reduction and efficiency increase. In 2021, the cost ratio decreased by 7.6pct to 31.0% year-on-year, driving the comprehensive cost ratio to decline by 1.1pct to 98.0% year-on-year, a slight increase of 0.7pct compared with the previous three quarters.
Investment: the net return on investment was -0.5pct year-on-year. In 2021, the company achieved a net return on investment of 4.6%, with a year-on-year rate of -0.5pct, up from + 0.4pct in the first three quarters; Due to the fluctuation of capital market, the decline of market interest rate and the increase of impairment provision, the company’s total return on investment decreased by 2.2pct to 4.0% year-on-year, up from + 0.3pct in the first three quarters.
Bank: steady growth of revenue and improvement of risk offset ability. In 2021, Ping An Bank Co.Ltd(000001) achieved an operating revenue of 169.38 billion yuan, a year-on-year increase of + 10.3%, a growth rate of + 1.2pct compared with the first three quarters; The net profit attributable to the parent company was 36.34 billion yuan, a year-on-year increase of + 25.6%, a growth rate of – 4.5pct compared with the first three quarters; The net interest margin was 2.79%, year-on-year -0.09pct, compared with -0.02pct in the first three quarters; The non-performing loan ratio was 1.02%, year-on-year -0.16pct, compared with -0.03pct in the first three quarters; The provision coverage rate was 288.4%, 20.1pct thicker than that in the first three quarters, and the risk offset ability was further improved.
Comprehensive finance: the net profit of asset management business was + 13.5% year-on-year. In 2021, the company’s asset management business realized a net profit of 13.95 billion yuan, a year-on-year increase of + 13.5%, with a growth rate of – 28.6pct compared with the first three quarters. Among them, Ping An Trust continued to optimize the asset structure. By the end of 2021, the asset management scale had increased by 18.0% to 461.31 billion yuan compared with the beginning of the year, of which the investment scale had increased by 117.7% to 256.75 billion yuan compared with the beginning of the year; Relying on the group’s comprehensive financial and technological advantages, Ping An Securities comprehensively promoted the digital and peaceful Taihua operation and achieved steady growth in performance. In 2021, it achieved a net profit of 3.829 billion yuan, a year-on-year increase of + 23.4%, with a growth rate of + 5.7pct compared with the first three quarters.
Profit forecast and rating: the company’s life insurance reform continues to deepen, the agents are greatly cleared, and NBV is under pressure in the short term. It is expected that in the future, with the gradual improvement of the quality of the agent team and the gradual emergence of the reform results, the company will actively promote the empowerment of science and technology, layout the construction of healthy ecology and the construction of the elderly care industrial chain, and the performance is expected to rebound. Considering the regional recurrence of the epidemic and the year-on-year decline of 29.0% in the company’s net profit attributable to the parent in 2021, we lowered the company’s forecast of net profit attributable to the parent from 2022 to 2023 by 1.3% / 4.7% to RMB 144.8/169.5 billion respectively, and increased the forecast of net profit attributable to the parent in 2024 by 192.5 billion; At the same time, taking into account the decline in the share prices of subsidiaries such as auto home, Lujin holdings, financial one account link and ping an good doctor, we reduced the target price of a / H shares by 27.9% / 22.1% to 67.77 yuan / 82.37 Hong Kong dollars. At present, the A / H share price corresponds to the company’s 22-year PEV of 0.55/0.54. At present, the valuation is relatively low. Considering that the company’s dividend is stable and maintains a high growth rate, the “buy” rating of a / H shares is maintained.
Risk tip: the economic recovery is less than expected; The advancement of policy reform is less than expected; The long-term interest rate was lower than expected.
