\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 318 Ping An Insurance (Group) Company Of China Ltd(601318) )
The operating profit of bank and technology bank increased by 19.6% and 1 1 1 6.5% respectively, with a year-on-year increase of 6 1 1 6 1 6 1 6 1 1 1 1 1 6 6; Operating roe reached 18.9%; The net profit attributable to the parent company was 101618 billion yuan, a year-on-year decrease of 29.0%. The annual dividend reached 2.38 yuan / share, a year-on-year increase of 8.2%, and the dividend distribution rate of operating profit increased to 29.2% from 28.7% in 2020.
Key investment points
Covid-19 epidemic has repeatedly dragged down the growth of life insurance value. In 2021, the company’s life insurance and health insurance business realized nbv378 RMB 9.8 billion, a year-on-year decrease of 23.6% (the company adjusted the assumption, a year-on-year decrease of 18.6% under comparable caliber, corresponding to a year-on-year decrease of 23.7% in 4q21). From the perspective of attribution, nbvfyp decreased by 8.5% year-on-year and NBV margin decreased by 3.7pps year-on-year under the comparable caliber, which is mainly due to the repeated covid-19 pneumonia epidemic, cautious customer consumption, increased difficulty in selling serious illness insurance products, and the life insurance industry is facing the pressure of transformation. The company took the initiative to consolidate the foundation and eliminate low-energy agents. At the end of the period, the manpower decreased by 41.1% year-on-year to Shanghai Pudong Development Bank Co.Ltd(600000) , the quality showed signs of improvement, the per capita income decreased slightly by 0.6% year-on-year, and the per capita first year premium increased by more than 22% year-on-year. The residual margin of life insurance decreased by 2.0% compared with the beginning of the year, and the life insurance OPAT increased by 3.6% year-on-year, reflecting the business resilience, which was affected by the weak contribution of new business, the difference in withdrawal and other negative contributions (- 3.1%). Looking forward to 2022, we expect that the value will still be under pressure, but the inflection point is expected to appear in the second half of the year. The company continued to promote the reform strategy of “4 channels + 3 products”, and the digital pilot began to take effect. 30% of the business departments have been promoted, and the NBV of each department has increased by 10%.
The quality of property insurance business remains good and continues to be optimized. In 2021, the company’s comprehensive cost ratio was 98.0%, with a year-on-year optimization of 1.1 PCT., in which the expense ratio decreased by 7.6 PCT. To 31.0% year-on-year, and the loss ratio increased by 6.5 PCT. to 67.0% year-on-year; Underwriting profit was 5.136 billion yuan, a year-on-year increase of 145.7%, thanks to the turnaround of credit insurance business. The comprehensive cost rate of auto insurance is 98.9% (97.4% and 100.3% in the first and second half of the year respectively). It is not easy under the comprehensive influence of the comprehensive reform of auto insurance and the rainstorm in Henan. We expect the comprehensive cost rate of auto insurance to remain within 98% in 2022.
China Fortune Land Development Co.Ltd(600340) impairment dragged down the growth of investment income. The net return on investment of the company was 4.6% (year-on-year – 0.5 PCT.), the total return on investment was 4.0% (year-on-year – 2.2 PCT.), and the proportion of stock based investment at the end of the period decreased by 0.9 PCT. to 9.3% year-on-year. The company’s 4q21 investment income is obviously under pressure. The short-term investment fluctuation in the deviation between life insurance OPAT and net profit expanded from -18.636 billion yuan in the third quarter of 2021 to -23.491 billion yuan in 2021. The difference between net profit attributable to parent company and operating profit is mainly due to the impairment provision and other adjustments for China Fortune Land Development Co.Ltd(600340) related investment assets (totaling 43.2 billion yuan). After excluding the impact of China Fortune Land Development Co.Ltd(600340) impact, the year-on-year growth rate of operating profit and net profit is 11.3% / – 12.0% respectively, and the total return on investment is 5.2%.
The company carefully adjusted non economic assumptions. The slowdown of EV growth was affected by the negative contribution of NBV growth slowdown and investment return difference. In 2021, the year-on-year growth rates of life insurance and group EV were 6.3% and 5.1% respectively (it is worth noting that the company adjusted non economic assumptions such as surrender rate and expense rate according to actual experience. If according to the assumptions and models used in the evaluation in 2020, the year-on-year growth rates of life insurance and group EV in 2021 were 7.1% and 5.6% respectively), and the adjusted life insurance roev decreased by 3.4 PCT. to 11.1% year-on-year. The difference in investment return dragged down the year-on-year growth rate of life insurance EV at the beginning of the period by 3.0 PCT; Changes in operating assumptions / models, experience differences and other factors dragged down the year-on-year growth rate of life insurance EV at the beginning of the period by 2.0 PCT; The revaluation gains and losses of convertible promissory notes with Lujin holding as the subject dragged down the year-on-year growth of non life insurance net assets by 2.0 PCT; Dividend and repurchase efforts are greater than those in the same period. We expect that there will still be some pressure on EV growth in 2022, with a year-on-year growth rate of about 7.5%.
Profit forecast and investment rating: the company’s performance basically meets the market and our expectations. The operation at both ends of the company’s assets and liabilities is obviously under pressure, but the continuous growth of dividends shows the operation toughness. The company’s 5-10 billion yuan A-share repurchase plan has strengthened market confidence (3.9 billion yuan has been completed at present), and the dawn of life insurance reform is expected to be seen in the second half of the year. We raised the company’s net profit attributable to the parent company from 2022 to 2024 to 151.9 billion yuan, 171.6 billion yuan and 188 billion yuan (the original forecast for 20222023 was 136.6 billion yuan and 157 billion yuan, and the new forecast for 2024), with a year-on-year growth rate of 7.8%, 7.1% and 7.7%. The current company performance and emotional lows are passing. As of March 17, 2022, the company’s share price corresponding to P / EV from 2022 to 2024 was 0.54, 0.49 and 0.47 times respectively, maintaining the “buy” rating.
Risk tips: 1) the epidemic has repeatedly dragged down the sales recovery of guaranteed products, which is less than expected; 2) The sharp decline of long-term interest rate and the sharp fluctuation of equity market affect the investment income; 3) The reform of life insurance is advancing slowly.
