\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 628 China Life Insurance Company Limited(601628) )
Matters:
China Life Insurance Company Limited(601628) released the annual report and profit distribution plan for 2021. In 2021, the net profit attributable to the parent company was 50.9 billion yuan (YoY + 1%), the total life insurance premium was 618.3 billion yuan (YoY + 1%), and the total new orders were 175.9 billion yuan (yoy-9%); EV is 1.2 trillion yuan (YoY + 12%). The company plans to pay a cash dividend of 0.65 yuan per share (including tax), totaling about 18.4 billion yuan (including tax), accounting for 36% of the net profit attributable to the parent company.
Ping An View:
NBV decline and negative contribution of multi-directional deviation dragged down EV growth. The EV of Guoshou in 2021 was 1.2 trillion yuan (YoY + 12%), of which NBV, operation deviation, investment deviation and assumption change accounted for 4.2%, – 0.6%, – 0.3% and – 0.7% respectively at the beginning of the period, and the proportion decreased.
New long-term insurance orders are under pressure, business structure is callback, and new orders, nbvm and NBV decline simultaneously. In 2021, the total new orders of Guoshou were 175.9 billion yuan (yoy-9%), the total NBV was about 44.8 billion yuan (yoy-23%), and the total nbvm was about 25% (yoy-5pct). Among them, the new regular payment orders of individual insurance and bancassurance were 82.3 billion yuan (yoy-17%) and 16.1 billion yuan (YoY + 2%) respectively. The NBV of individual insurance, bancassurance and other channels were – 26% and + 161% year-on-year respectively. The nbvm calculated according to the first year premium was 42% (yoy-6pct) and 11% (YoY + 7pct) respectively.
1) from the perspective of the term of first-year regular premium payment, new orders with a term of 10 years and above are 41.7 billion yuan (yoy-26%), accounting for 24% (yoy-5pct) of the total new orders. 21q1-21q4 are – 23%, – 34%, – 12%, – 39% year-on-year respectively. The decline of 21q4 is wider, mainly due to the preparation for a “good start”. Specifically, 41.6 billion yuan (yoy-26%) of new orders for personal insurance with a ten-year term and above, and 6.7 billion yuan (YoY + 35%) of new orders for bancassurance with a five-year term and above.
2) in terms of insurance types, the total new orders of health insurance are 73.1 billion yuan (YoY + 5%), of which 13.6 billion yuan (YoY + 44%) are new orders for long-term insurance, accounting for 7.7% (YoY + 2.8pct). However, from the perspective of Guoshou’s new periodic payment of individual insurance, the first-year premium of ten-year and above and NBV of individual insurance, the probability is driven by medium and short-term health insurance, the structure of new orders has not been improved, and the pressure on the liability side (especially long-term security insurance) is obvious.
With the transformation of the life insurance industry, the company has made great efforts to clear up the deficiency, and the team size has continued to decline. In 2021, there were 820000 individual insurance sales manpower (yoy-40%), including 519000 marketing teams (yoy-38%) and 537000 closing teams (yoy-44%). The closing team decreased even more, and the monthly effective sales manpower decreased year-on-year, but the high achievers were stable. It is estimated that the per capita production capacity is about 10317 yuan / month (YoY + 42%), which is mainly due to the passive growth caused by the decline of manpower.
We increased investment in long-term interest rate bonds and exposure to controlling interests, and the rate of return on investment was basically stable. In 2021, the total, net and comprehensive investment returns were 5.0% (yoy-0.3pct), 4.4% (YoY + 0.04pct) and 4.9% (yoy-1.5pct) respectively, and the proportion of stock + fund investment was only 8.8% (yoy-2.5pct).
Investment suggestion: the life insurance industry is at a critical moment of transformation, the scale of the company’s agent team is reduced, the sales of guarantee insurance is under pressure, and there is a certain base pressure for a “good start”; At the same time, the policy continuation rate fell and the 750 day moving average moved down. However, life insurance has the ability of value endogenous growth. Based on this, we adjusted the assumptions of new orders, nbvm, policy continuation rate and Reserve discount rate. The EVPs forecast in 2022 was raised from 46.38 yuan to 47.69 yuan. The company’s current share price corresponds to about 0.54 times of PEV in 2022, maintaining the “recommended” rating.
Risk tips: 1) the equity market fluctuates greatly, β Property led to increased volatility of the sector market. 2) The number of agents continued to decline, the quality improvement was less than expected, and the new orders fell more than expected. 3) The interest rate is lower than expected, and the allocation of maturing assets and new assets is under pressure.
