\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 628 China Life Insurance Company Limited(601628) )
Event: the company disclosed that the annual report of 2021: the net profit attributable to the parent company was 50.921 billion yuan, a year-on-year increase of 1.3%; The comprehensive income attributable to the parent company was 46.358 billion yuan, a year-on-year decrease of 39.0%; At the end of the period, the dividend was 0.65 yuan per share, and the dividend rate remained 36%. The performance is in line with our expectations.
The difficulty of long-term insurance sales has increased, which has dragged down the growth of new orders and premiums. In 2021, the company achieved a total premium income of 618327 billion yuan, with a year-on-year increase of 1.0%, including a year-on-year increase of 5.8% for renewal and a year-on-year decrease of 9.3% (the quarterly year-on-year growth rates of 1q21 to 4q21 were - 6.4%, - 14.4%, - 4.7% and - 23.3% respectively). The slowdown in the growth rate of new orders is due to the impact of the epidemic situation and the slow release of insurance demand. Among them, the first-year premium for ten-year period and above decreased by 26.1% year-on-year (the quarterly year-on-year growth rates from 1q21 to 4q21 were - 22.5%, - 34.3%, - 12.1% and - 39.0% respectively). 4q21 is further under pressure from the repeated impact of covid-19 epidemic in various places.
The growth of individual insurance channels was weak, and the contribution of Bancassurance increased. In 2021, the year-on-year growth rate of new orders of individual insurance / bancassurance / group insurance / other channels was - 15% / 2% / 2% / - 2% respectively, and the contribution to new orders was 82% / 8% / 5% / 5% respectively. In 2021, the NBV of the company's personal insurance sector reached 42.945 billion yuan, a year-on-year decrease of 25.5%. In terms of attribution, the first annual premium decreased by 15.5% year-on-year, and the value ratio of new business decreased by 5.9 PCT. to 42.2% year-on-year. At the end of the period, the sales manpower of individual insurance was 820000, of which the scale of marketing / exhibition team was 51.9/301 thousand (84.1537000 in the same period). The normalized operation 4.0 system of individual insurance team was fully promoted and implemented to promote the transformation of sales team to specialization and professionalism. The team decreased quarter by quarter, and the company increased its efforts to eliminate the deficiency. We calculated that the per capita premium production capacity and per capita NBV of the company's team increased by 20.4% and 5.8% year-on-year respectively. We expect that the company's development ideas of improving quality and expanding quantity will remain unchanged and pay attention to the optimization of quality and state. Bancassurance channel benefits from continuously strengthening the professional service support ability of the team, and the quality of the team has been steadily improved. We predict that NBV's year-on-year growth rate in 2022 will be low before and high after the previous year, with an annual decline of 8.0%, and 2h22 is expected to return to positive growth.
The return on net investment rose against the trend and the proportion of stock based allocation decreased. In 2021, the net / total / comprehensive return on investment was 4.38% / 4.98% / 4.87% respectively, with a year-on-year increase of + 4bps / - 32bps / - 146bps. The ending investment assets increased by 15.2% to 4716401 billion yuan compared with the end of 2020. The steady growth of the net return on investment was due to the company's continuous increase in the allocation of long-term bonds, the increase in the contribution of investment income of associates and joint ventures, and the sharp fluctuation of the equity market dragged down the total / comprehensive investment income. The company's share based allocation ratio at the end of the period decreased from 11.31% at the end of 2020 to 8.75%, and increased the bond allocation to 48.20%, demonstrating the stability and long-term development of the bank. The steady growth of profit is the comprehensive impact of the steady investment performance (the total investment income + profit and loss from changes in fair value increased by 12.2% year-on-year) and the company's updating of the discount rate assumption of traditional insurance reserves (reducing the pre tax profit by 38.275 billion yuan), and the decrease of floating profit of available for sale financial assets dragged down the growth of comprehensive income.
Value growth is under pressure. At the end of the period, the embedded value increased by 12.2% to 1203008 billion yuan compared with the beginning of the year, and the NBV decreased by 23.3% to 44.780 billion yuan (the quarterly year-on-year growth rates of 1q21 to 4q21 were - 13.2%, - 25.5%, - 21.2% and - 42.1% respectively). According to our attribution calculation, NBV new orders decreased by 10.7% year-on-year, and NBV margin decreased by 5.1 percentage points to 31.2% year-on-year. The roev of life insurance was 11.5%, with a year-on-year decrease of 2.8 PCT., mainly due to the slowdown of NBV growth rate to 4.2% at the beginning of the period, while the deviation of operating experience, investment return and changes in evaluation methods / models and assumptions dragged down the growth rate of EV by 1.6 PCT in 2021, while it boosted by 2.7 PCT in 2020. We expect the company's EV growth rate to be 10.7% year-on-year in 2022.
Profit forecast and investment rating: affected by the mention of reserves and the decline of long-term interest rates, we lowered our profit forecast. We estimate that the net profit attributable to the parent company from 2022 to 2024 will be 54.5 billion yuan, 57.3 billion yuan and 62.9 billion yuan respectively (the original forecast from 2022 to 2023 was 60.8 billion yuan and 73.9 billion yuan), with a year-on-year growth rate of 7.0%, 5.2% and 9.8%. As of March 24, 2022, the company's share price corresponding to P / EV from 2022 to 2024 was 0.54, 0.49 and 0.45 times respectively, maintaining the "buy" rating.
Risk tips: 1) the follow-up sales of guaranteed products are less than expected; 2) Long term interest rates fell sharply.
