\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 628 China Life Insurance Company Limited(601628) )
Event: in 2021, the company realized an operating revenue of 858.5 billion yuan (YoY + 4.1%), a net profit attributable to the parent company of 50.9 billion yuan (YoY + 1.3%), and an NBV of 44.8 billion yuan (YoY – 23%).
We believe that the main changes in the company’s 2021 annual report include: (1) the superposition of the epidemic, the weakening of demand and the continuation of NBV pressure. Due to the impact of the epidemic and the weakening demand, the new single premium in 2021 was 175.9 billion yuan, a year-on-year decrease of 9.3%. Nbvm of individual insurance further declined to 42% (yoy-5.9pct.), NBV fell 23% year-on-year. (2) The scale of agents has declined significantly. By the end of 2021, the number of individual insurance sales personnel had reached 820000 (yoy-40%), including 520000 (yoy-38%) marketing teams and 300000 (yoy-44%) exhibition teams. (3) The total return on investment was 4.98%, and ev grew steadily. In 2021, the company’s total return on investment and net return on investment were 4.98% and 4.38% respectively, with changes of -0.32pct- 0.08pct.。 The embedded value of the group reached 1203 billion yuan, a year-on-year increase of 12.2%.
Under pressure in value and scale, NBV fell 23% year-on-year. In 2021, the company’s premium income was 618.3 billion, with a year-on-year increase of 1%, of which new orders and renewal were – 9% and + 4.3% year-on-year respectively, and the growth rate of NBV in the whole year decreased by 23%. In terms of individual insurance sector, the first-year premium for ten-year period and above was 41.6 billion yuan, a year-on-year decrease of 26%. In addition, subject to the weak sales of guaranteed long-term insurance, nbvm of individual insurance further fell to 42% (yoy-5.9pct.), NBV fell 23% year-on-year. In terms of Bancassurance channels, we adhered to the positioning of paying equal attention to scale and value. The new single term premium was 16.1 billion, an increase of 20% year-on-year. In addition, the total premium income of group insurance and other channels was + 1% and – 2.4% respectively.
The scale of manpower team has declined significantly, and the high achievers are relatively stable. Under the influence of factors such as the persistence of the epidemic and the weakening of insurance demand, the company strengthened its efforts to clear up the deficiency, and the loss of superimposed agents led to the decline and amplification of the team scale. By the end of 2021, the number of individual insurance sales personnel had reached 820000 (yoy-40%), of which the size of marketing team was 520000 (yoy-38%), and the size of exhibition team was 300000 (yoy-44%). The monthly effective sales manpower of the personal insurance sector decreased year-on-year, but the blue chip group was relatively stable.
The rate of return on investment declined, and the holdings of bonds decreased equity. By the end of 2021, the company has achieved a total investment asset scale of 4716.8 billion yuan (YoY + 15%), a total investment income of 214.1 billion yuan, and a total investment return and net investment return of 4.98% and 4.38% respectively, with changes of -0.32pct- 0.08pct.。 In terms of investment structure, the proportion of bonds increased by 6.25 PCT year-on-year, The proportion of time deposits to shares decreased by 2.09pct 2.55pct. It was mainly due to the company’s increasing long-term interest rate bonds and reducing the risk exposure of the secondary market in the first half of the year. The overall asset allocation related to real estate accounts for about 4%, and the risk is generally controllable.
The growth rate of embedded value was 12%, dragged down by the slowdown of investment and NBV. By the end of 2021, the embedded value of the group had reached 1203 billion yuan, a year-on-year increase of 12.2%. Among them, NBV increased by 44.8 billion, the deviation of operation assumption was – 6.4 billion, the deviation of investment assumption was – 2.7 billion, and the change of model and assumption was – 7.6 billion, with a year-on-year decrease of 13.6 billion, 7 billion, 26.7 billion and 8.6 billion respectively, which slowed down the growth rate of EV.
Investment suggestion: maintain the Buy-A investment rating. It is estimated that the company’s EPS from 2022 to 2024 will be 2.10 yuan, 2.50 yuan and 2.77 yuan respectively, corresponding to 0.53 times of PEV in 2022 and a six-month target price of 32 yuan.
Risk warning: market risk / macro risk / credit risk / policy risk
