\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 319 The People’S Insurance Company (Group) Of China Limited(601319) )
Event:
In 2021, the The People’S Insurance Company (Group) Of China Limited(601319) operating revenue was 597.7 billion yuan, a year-on-year increase of + 2.4%, and the net profit attributable to the parent company was 21.6 billion yuan, a year-on-year increase of + 7.8%; ROE10. 3%, year-on-year -0.1pct; NBV39. 900 million yuan, a year-on-year increase of – 34.9%; Life insurance was 127.6 billion yuan, up + 8.8% from the beginning of the year; The final dividend per share is RMB 22.5% year-on-year.
Comments:
The net profit attributable to the parent company was + 7.8% year-on-year, and the growth rate slowed down. In 2021, the company realized a net profit attributable to its parent company of 21.6 billion yuan, a year-on-year increase of + 7.8%, a decrease of 3.1pct compared with the first three quarters, of which 21q4 decreased by 35.3% year-on-year to 860 million yuan, a decrease of 1.3pct compared with 21q3, realizing marginal improvement. The slowdown in net profit growth was mainly affected by the frequent occurrence of typhoons, rainstorms, earthquakes and other natural disasters since the second half of 2021. PICC Property Insurance 21h2 underwriting loss was 3.61 billion yuan, and 21q3 / Q4 net profit decreased by 17.5% / 0.7% year-on-year to 3.48/6.06 billion yuan respectively.
Property insurance: the pressure of comprehensive reform of automobile insurance has weakened, the credit insurance business has turned losses into profits, and the comprehensive cost rate is + 0.6pct year-on-year.
(1) the pressure of comprehensive reform of auto insurance was weakened, and the premium of 21q4 auto insurance was + 8.9% year-on-year. In 2021, the company continued to optimize its auto insurance business model. The renewal rates of auto commercial insurance and traffic compulsory insurance were + 2.0pct and + 2.1pct year-on-year respectively, and the number of insured cars was + 11.3% and + 9.9% year-on-year respectively; At the same time, the company vigorously developed the family car business, with a market share of + 1.4pct year-on-year and a premium share of + 1.0pct year-on-year. In 2021, the company achieved an auto insurance premium income of 255.3 billion yuan, with a year-on-year decrease of – 3.9%, 4.3pct narrower than that in the first three quarters, of which 21q4 auto insurance premium income was 72.3 billion yuan, with a year-on-year increase of + 8.9% and a quarter on quarter increase of + 16.1%. Since the comprehensive reform of auto insurance in September 2021, the pressure has weakened.
(2) credit insurance business turned losses into profits, and the proportion of non auto insurance in 21 years was + 4.6pct. The company continued to clear the stock risk. In 2021, the premium of credit insurance business decreased by 46.2% year-on-year to 2.84 billion yuan, of which the scale of financing credit insurance business decreased significantly year-on-year, but the scale of non financing credit insurance business with good profitability increased by 31.0% year-on-year, driving the overall underwriting profit of credit insurance business to reach 1.76 billion yuan and turn loss into profit (loss of 5.1 billion yuan in 2020). Meanwhile, in 2021, the premiums of enterprise property insurance / liability insurance / Italian health insurance / agricultural insurance increased by 4.7% / 16.4% / 21.9% / 19.3% year-on-year to RMB 149 / 331 / 807 / 42.7 billion respectively, driving the premiums of non auto insurance (including Italian health insurance) to RMB 193.1 billion (21q4 + 41.1%) year-on-year, accounting for 43.1%, year-on-year + 4.6pct, and the overall business structure is more balanced.
(3) year on year comprehensive cost rate of 21 years + 0.6pct. The company actively promoted cost reduction and efficiency increase and improved resource utilization efficiency. The cost rate in 21 years decreased by 6.8pct to 25.9% year-on-year, of which the handling rate of automobile insurance decreased by 5.4pct to 7.8% year-on-year. However, due to the decline of average vehicle premium, the increase of compensation liability and the frequent occurrence of natural disasters, the compensation ratio increased by 7.4pct to 73.6% year-on-year, making the comprehensive cost ratio increased by 0.6pct to 99.5% year-on-year. However, the market share of the company’s property insurance business is ahead of its peers, with a steady increase of 1.0pct to 32.8% year-on-year in 2021. It is expected that there is still room for compression of costs in the future under the effect of scale, and the comprehensive cost ratio is expected to decrease steadily.
Life insurance: the agent continues to clear up, the new order recovers, and NBV is under pressure temporarily. The company strengthened the construction of channel specialization. By the end of 2021, the number of agents (PICC Life Insurance “big personal insurance” channel + PICC Health personal insurance marketers) had decreased by 55.3% year-on-year to 192000 (21h1 / H2 dropped by 17.2 / 66000 respectively). Under the pressure of channel reform, the new orders of the company’s life insurance business (PICC Life Insurance + PICC Health, the same below) had decreased by 1.1% year-on-year to 72.4 billion yuan in 2021, but the decline was 8.0pct narrower than that in the first three quarters, Among them, 21q4 increased by 43.4% year-on-year to RMB 16 billion, and 21q4 business of long-term insurance in the first year increased by 54.9% year-on-year to RMB 15 billion, showing a bright performance. It is expected that NBV will fall by 34.9% year-on-year to RMB 3.99 billion in 2021 due to the weak sales of long-term guaranteed products with high value rate. It is temporarily under pressure. It is expected that NBV is expected to rebound in the future with the gradual improvement of reform results and the increase of agent team quality.
Investment side: the total return on investment remains stable. In 2021, the company strengthened the matching of assets and liabilities, optimized the allocation of large categories of assets, achieved a net return on investment of 4.8%, a year-on-year -0.2pct, and a total return on investment of 5.8%, which was the same as that in 2020, and the overall performance was stable.
Profit forecast and rating: with the further reduction of the cost of the company’s auto insurance business under the effect of scale, the continuous growth of non auto insurance business and the recovery of NBV after the improvement of the quality and efficiency of life insurance sales team, the profit is expected to be released. Considering the decline of underwriting profit of the company’s property insurance business in 2021, the regional recurrence of the epidemic and the uncertain economic situation outside China, we lowered the company’s forecast of net profit attributable to the parent company from 2022 to 2023 by 17.7% / 18.3% to 29 / 36.6 billion yuan, and increased the forecast of net profit attributable to the parent company in 2024 by 39.9 billion yuan. At present, the A / H share price corresponds to the company’s 22-year PEV of 0.68/0.31, maintaining the “buy” rating of a / H shares.
Risk warning: the premium income is less than expected; The pressure of auto insurance reform recovered less than expected; Interest rates fell more than expected.
