\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 318 Ping An Insurance (Group) Company Of China Ltd(601318) )
Ping An Insurance (Group) Company Of China Ltd(601318) released the annual report for 2021, and the company achieved an operating revenue of 1180444 billion yuan, a year-on-year decrease of 6.4%; The net profit attributable to the parent company was 101618 billion yuan, a year-on-year decrease of 29.0%; The operating profit attributable to the parent company was 147961 billion yuan, a year-on-year increase of 6.09%; At the end of the reporting period, the group’s embedded value was 1395509 billion yuan, an increase of 5.07% over the end of the previous year. The embedded value of the company’s life insurance and health insurance business was 876.49 billion yuan, an increase of 6.30% over the end of the previous year; The value of new business was 37.898 billion yuan, a year-on-year decrease of 23.55%.
With the decline of consumption power and the disappearance of agent dividends, the insurance industry has entered the “late autumn” Ping An Insurance (Group) Company Of China Ltd(601318) 2021 new business value of life insurance and health insurance decreased by 23.6% year-on-year, falling for two consecutive years; At the end of 2021, the number of life insurance agents decreased by 41.4% year-on-year. The number of time points has decreased for 13 consecutive quarters, and the decline has expanded rapidly. The main reason is that in recent years, with the decline of economic growth, the growth rate of residents’ disposable income has also decreased, and the consumption ability and willingness have also been greatly affected. After the outbreak of covid-19 epidemic in 2020, the insurance business with strong consumption attribute has been more impacted. At the same time, under the background of the epidemic and stricter supervision, it is more difficult for insurance agents to expand their business, and the overall order volume and performance rate continue to decline, which puts pressure on their income. Under the continuous negative feedback, a large number of agents fall off actively or passively, the “agent bonus” caused by the rapid growth of the team in the early stage gradually disappeared, and the growth rate of premium income of insurance enterprises slowed down significantly.
As the operation becomes more difficult, Ping an actively seeks the way to break the situation. In view of the multifaceted challenges faced by the life insurance business, the company has started the reform process in two dimensions: channel and product. On the channel side, the company actively promotes high-quality development, continues to improve quality and efficiency, and creates a high-quality and high-capacity diamond agent team. At the same time, it vigorously develops the potential team in Central China, cultivates a new team of talents, and strives to transform the human structure from the traditional pyramid to the olive. In addition, the company is also promoting the development of three innovative channels for non agents, serving orphan insurance policy customers caused by the loss of agents through community grid construction; Deepen the cooperation with the bank in wealth management; Develop the insurance demand of cities and towns below the third and fourth tier through deep cultivation and sinking the market. While promoting channel reform, the company is also vigorously promoting product reform, creating a differentiated product system of “insurance + service” to serve the increasingly mature safe medical ecosystem. In terms of medical ecosystem, the company continues to upgrade its medical and health strategy. With the concept of “HMO + family doctor + o2o” as the core and relying on the continuous policy support of the state for the third pillar of elderly care, the company actively gives full play to the comprehensive advantages of medical ecosystem, focuses on developing the elderly care service modes of “insurance + home-based elderly care” and “insurance + high-end elderly care”, and strives to realize the “secondary growth” of business through the power of policy.
While continuing to promote the reform of its main business, the company creates greater value through collaboration among business segments. The company’s early continuous investment in banking, science and technology and other fields has produced remarkable results, the advantages of banking business have been brought into play, and the value of science and technology enabled finance is also rapidly emerging. The company carried out the reform of Bancassurance channels by digging deep into bank wealth management customers, and the proportion of Bancassurance channels in premium income continued to increase. Science and technology can be applied to the core financial business scenario to “promote sales, improve efficiency and control risks”. With the help of science and technology, the company continues to promote science and technology enabled ecology and ecological enabled finance, improve customer acquisition capacity and customer viscosity around financial services, medical and health services, automobile services and smart city ecosystem, and then create greater value.
Investment suggestion: 2022 has entered the third year of Ping An Life insurance reform. Affected by the epidemic situation, macro-economy, agents, insurance demand and other factors, the reform effect is less than expected, and the reform process continues to lengthen. At the same time, AIA life’s accelerated layout in China has greatly weakened Ping An’s competitive advantage in the medium and high net worth customer base, the growth rate of high net worth customers has been slowing down, the channel is facing a sinking situation, and the competition between insurance enterprises is also more intense. However, we believe that through three years of comprehensive channel reform, the quality and production capacity of the company’s agent team have been effectively improved, and the core agent team has been growing, which is still expected to be in a more favorable position in the competition with AIA and Chinese peers. At the same time, under the guidance of the national policy of “stable growth”, the risks of the company’s housing related projects are expected to be released continuously. After full provision in the early stage, the operating pressure on both ends of the company’s capital burden is expected to be relieved. The high-quality customer resources of Ping An Bank Co.Ltd(000001) will continue to feed the main insurance industry, and the science and technology line will also empower the main industry. By integrating the advantageous medical resources within Founder group, the insurance ecological puzzle of the company will also be improved. In addition, the company still keeps the dividend growth rate at a high level when the growth rate of operating profit slows down, which reflects the company’s optimistic judgment on its own business development trend, and is also expected to repair investor confidence and improve market reputation and reputation. Therefore, we are still optimistic about the long-term investment value of the company as an industry leader under the Matthew effect, in which the scientific and technological attribute is expected to continuously raise the valuation ceiling of the company. We maintain the “recommended” rating of the company. The current stock price corresponds to only 0.56x of 22-year EVPs, which is in the undervalued region, and the medium and long-term investment value is prominent. The target price for the year is 58.8 yuan, corresponding to 0.7x22evps.
Risk tips: macroeconomic downside risk, policy risk, market risk and liquidity risk.
