\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 318 Ping An Insurance (Group) Company Of China Ltd(601318) )
Event: Ping An Insurance (Group) Company Of China Ltd(601318) in 2021, the operating profit attributable to the parent company was about 148 billion yuan (YoY + 6.1%), the net profit attributable to the parent company was 101.6 billion yuan (yoy-29%), the value of new business was 37.9 billion yuan (yoy-23.6%), the embedded value of the group was 1.4 trillion yuan (YoY + 5.1%), and the dividend per share was 2.38 yuan (YoY + 8.2%) in 2021. We believe that the core focus of the 2021 annual report lies in: (1) multiple factors drag down the guarantee of product sales, and the value of new business is lower than expected. Affected by the persistence of the epidemic, the impact of competitive products for the benefit of the people and the tightening of residents’ consumption, new individual insurance orders fell by 6% year-on-year, the sales of long-term guarantee new orders were weak, the contribution of new business value fell by 51% year-on-year, dragging down the overall value rate by 5.5pct To 27.8%, which dragged down NBV by 24% year-on-year, slightly lower than previously expected. (2) Agent shedding continues, and channel reform needs to be effective. By the end of 2021, the number of agents had been reduced to Shanghai Pudong Development Bank Co.Ltd(600000) and the activity rate had decreased by 2.3pct due to the company’s lack of integrity and the difficulty of exhibition, NBV per capita decreased by 4.1%. (3) Property insurance performed better than expected, and the optimization of comprehensive cost rate promoted the high increase of profits. The comprehensive cost rate of Ping An Property Insurance was optimized by 1.1 percentage points to 98% year-on-year. Underwriting profit increased by 146% year-on-year to 5.1 billion yuan.
The transformation of individual insurance channels was deepened, and the value rate of new business was lower than expected. In 2021, the company’s life insurance and health insurance business realized an original premium income of 490.3 billion yuan (yoy-4.1%), and the value of new business was 37.9 billion yuan (yoy-23.6%), which was mainly dragged down by the decline of new orders and value ratio, the year-on-year decline of new individual insurance orders of 6% and the overall value ratio of 5.5pct to 27.8%. (1) Channel reform has accelerated, and the scale of manpower clearing has declined significantly. Affected by the increasing difficulty of agent exhibition and the lack of manpower of the company, the scale of individual insurance channel agents has decreased to Shanghai Pudong Development Bank Co.Ltd(600000) (yoy-41%) by the end of 2021. The agent’s per capita monthly income was 5758 yuan (yoy-0.6%), and the activity rate decreased significantly by 2.3 PCT. to 47%. The company’s channel transformation has entered the deep-water area. In the next step, the company will continue to build a high-quality team, strengthen the hierarchical and fine operation of the team, and use digital to drive the transformation and upgrading of the management system of agents and business departments. (2) Guarantee sales were weak and NBV margin fell. In 2021, long-term guaranteed sales were weak, and NBV’s contribution fell by 51% year-on-year; Long term storage products are difficult to supplement the price by volume. NBV’s contribution increased by 5% year-on-year, and the overall new business value decreased by 23.6%. In addition, from the perspective of product value ratio, NBV margin, a long-term guaranteed product, fell by 9.3pct due to factors such as intensified overall market competition and product structure adjustment To 86.7%, while long-term storage hybrid products fell 8.1pct To 47.5%. (3) Actively build a medical and health ecosystem. The company innovates and explores the group managed medical model with “HMO + family doctor + o2o” as the core. At present, 63% of Ping An’s more than 227 million individual customers have used medical and health services. With the integration of medical resources of Peking University, it is expected to greatly promote the sales of health insurance products, highlight the advantages of product differentiation, improve customer stickiness, and strive to become the Chinese version of United health.
The performance of auto insurance was better than expected, and the comprehensive cost rate was significantly improved. Affected by the compression of credit insurance business and the structural improvement brought about by the comprehensive reform of automobile insurance, in 2021, the company’s property insurance realized an operating profit of 16.159 billion yuan (YoY + 0.2%), and the comprehensive cost ratio was 98% (yoy-1.1 PCT.), of which the expense ratio decreased by 7.6 PCT and the loss ratio increased by 6.5 PCT. The premium income of auto insurance was 188.8 billion yuan (yoy-3.7%), but the market share of auto insurance increased by 0.5 PCT. to 24.3%. The comprehensive cost rate continued to optimize, and the overall performance was better than the market expectation. In addition, the compression of SINOSURE business reduced its comprehensive cost rate by 19.8pct To 91.2%, effectively helping to optimize the comprehensive cost rate of property insurance.
Banks grew steadily and asset quality continued to improve. In 2021, Ping An Bank Co.Ltd(000001) achieved a net profit of 36.3 billion yuan, with a year-on-year increase of 26%, becoming the main driving force for the growth of operating profit. By the end of 2021, its non-performing loan ratio was 1.02%, down 0.16 percentage points from the beginning of the year; The provision coverage rate was 288%, an increase of 87pct. Over the beginning of the year. In addition, the advantages of banking channels were highlighted. The scale of insurance and financing promoted by banks increased by 20.7% and 16.8% respectively year-on-year.
Market fluctuations superimposed large impairment, and the total return on investment was 4%. By the end of 2021, the company’s insurance capital investment reached 3.9 trillion, an increase of 4.7% over the beginning of the year. Affected by the fluctuation of market interest rate, China Fortune Land Development Co.Ltd(600340) impairment and the intensification of market fluctuation, the total return on investment is 4% (yo y-2.2pct.), The net return on investment is 4.6% (yoy-0.5pct.). From the perspective of investment structure, the proportion of stock and bond investment decreased by 1.4pct respectively And 1.5pct, The proportion of funds increased by 1.5pct. In addition, the balance of real estate investment was 216.1 billion yuan, and the proportion of total investment assets was 5.5%.
Continue to build a one-stop comprehensive financial service ecosystem. By 2021, the company had more than 230 million individual customers, 650 million Internet users, 39.3% (YoY + 1.3 PCT.) of customers with multiple contracts, 2.81 (YoY + 1.8%) of contracts per customer, and 572 yuan (YoY + 1.6%) of operating profit per customer.
The growth rate of embedded value was 6.3%, and the dividend was increased to give back to shareholders. In 2021, the group’s embedded value reached 1.4 trillion yuan (YoY + 5.1%), and the embedded value of life insurance and health insurance business was 876.5 billion yuan (YoY + 6.3%), with a growth rate lower than expected. In addition to the slowdown of new business value creation, the contribution of operation deviation was – 5.9 billion yuan, which was mainly affected by the decline of the company’s insurance policy continuation rate; The investment assumption deviation is – 24.9 billion yuan, which is mainly due to large impairment and market fluctuations, resulting in an investment return of less than 5%. In addition, the company paid a dividend of 2.38 yuan per share (YoY + 8.2%) in 2021, which was higher than the growth rate of the company’s operating profit, and continued to give back to shareholders by increasing dividends and repurchasing shares.
Maintain the Buy-A investment rating. Maintain the Buy-A investment rating. It is estimated that the EPS of Ping An Insurance (Group) Company Of China Ltd(601318) 2022-2024 will be 6.5 yuan, 6.9 yuan and 8.3 yuan respectively, corresponding to 0.58 times of P / EV in 2022. At present, P / EV is at a historical low, and the six-month target price is 62 yuan.
Risk tips: sharp fluctuations in the equity market, uncertainty in regulatory policies, continuous decline in the size of agents, etc.
