\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 628 China Life Insurance Company Limited(601628) )
1. Profit: the net profit attributable to the parent company increased by + 1.3% year-on-year to 50.9 billion, recovering positive growth (year-on-year – 13.8% in 2020), of which Q4 profit was 2.4 billion, year-on-year – 24%. Under the low base, the profit growth continues to slow down, which is expected to be due to the downward movement of the 750 moving average (year-on-year – 20bps to 3.06% at the end of the year), and the total pre tax profit in 2021 will be reduced by 38.3 billion. The performance of the investment side has a certain pulling effect on profits, and the total investment income increased by + 7.8% year-on-year to 214.1 billion.
2. Value: NBV increased from – 23.3% year-on-year to 44.78 billion yuan under the high base, of which h2nbv decreased from – 31% year-on-year, slightly lower than expected. The negative growth of q4nbv expanded (estimated to be about – 46% year-on-year in a single quarter), which is expected to be mainly due to the assumption of one-time adjustment of expense rate and continuation rate at the end of the year. The year-on-year premium of new policies was – 9.3% to 175.9 billion yuan, the first-year premium was – 14.7% to 98.4 billion yuan, and the first-year premium of ten years and above was – 26.1% to 41.7 billion yuan; However, the first-year delivery of new health insurance orders increased by 44.3% year-on-year to 13.6 billion, and the product structure improved.
In terms of personal insurance, NBV decreased from – 25.5% to 42.95 billion yuan year-on-year, and the new single premium and value rate decreased both year-on-year. Among them, the first-year premium increased from – 17.4% to 82.25 billion yuan year-on-year; Nbvmargin was -5.9pct year-on-year To 42.2%, which is expected to be caused by the deterioration of the product structure, and the first-year premium of ten years and above increased by – 26% year-on-year to 41.7 billion.
In terms of manpower, the sales force has decreased in volume but improved in quality. Since 2020, the company has taken the initiative to clean up low energy production agents. At the end of 21, there were 820000 individual insurance sales personnel (520000 marketing team and 300000 exhibition team), a year-on-year increase of – 40.5%; The average monthly effective sales manpower decreased slightly year-on-year, but the decline of agents was significantly higher than the decline of new single premium, the per capita production capacity was improved, and the high performing group was stable. We expect that after “squeezing out” the team, the follow-up sales team is expected to maintain a steady recovery trend.
In addition, the company actively promotes the development of bancassurance and group insurance channels. The first-year premium paid by bancassurance channels increased by 2.3% year-on-year to 16.1 billion yuan, of which the first-year premium paid for 5 years and above increased by 35% to 6.74 billion yuan, and the term structure of the policy was optimized; The number of account managers reached 25000, the quarterly actual manpower remained stable, and the per capita production capacity continued to grow. The total premium of group insurance channels increased by + 1% year-on-year to 29.16 billion yuan, and the sales staff reached 45000, of which the high-performance manpower increased by + 13% year-on-year.
EV was + 12.2% higher than that at the beginning of the year, and the growth rate slowed down (2020 was + 13.8%), which was mainly dragged down by operation deviation (- 6.4 billion), investment deviation (- 2.7 billion) and changes in models and assumptions (- 7.6 billion); The 14-month policy continuation rate and 26 month policy continuation rate were -5.2pct year-on-year respectively To 80.5%, – 1.3pct To 81.1%, surrender rate + 0.1pct To 1.2%, it is expected that the company will adjust its EV surrender rate, incidence rate and mortality rate at the end of the year. The contribution of NBV creation decreased by 2pct To 4%.
3. Investment: the net return on investment is 4.38%, year-on-year + 0.04pct; The total return on investment was 4.98%, with a year-on-year increase of -0.32pct; The comprehensive return on investment was 4.87%, with a year-on-year increase of -1.46pct, It was mainly affected by the shock of blue chip performance of high dividend banks included in available for sale financial assets. In terms of asset allocation, the proportion of bond allocation is + 6.2pct To 48.2%, mainly increasing the allocation of long-term interest rate bonds; Stock and fund allocation ratio -2.6pct To 8.8%.
Comments: Q4 profit and NBV are slightly weaker than expected. It is expected that one-time adjustment will bring greater flexibility to growth in 2022. We expect that as the company continues to promote the product matching scheme of xinyuzun annuity insurance + Zhenxiang heirs’ lifetime life, under the background of grasping the volatility of the equity market and the increase of customers’ Preventive Savings demand, the cumulative growth rate of new individual insurance orders since the beginning of the year has been basically the same year-on-year. We judge that the NBV of 2022q1 company has a year-on-year ratio of about – 18%, significantly ahead of other listed peers (except AIA); The decline of NBV in the whole year is expected to continue to narrow under the low base. We predict that the net profit attributable to the parent company in 20222024 will be 57.4 billion, 64.5 billion and 72.3 billion respectively, and yoy will be 12.7%, 12.3% and 12.2% (the net profit attributable to the parent company in 20222023 was 72.2 billion and 83.6 billion respectively). Reducing the profit forecast mainly takes into account the trend of the yield curve of government bonds in the next 750 days. At present, the company’s 2022pev is 0.54 times, which is at a historical low valuation. Optimistic about the excess return opportunities brought by the company’s leading peers on the liability side under the background of asset side valuation repair of the follow-up insurance sector, and maintain the “buy” rating.
Risk warning: the growth of agents does not meet expectations; The sales of guaranteed products do not meet expectations; The cost investment efficiency is reduced.
