\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 628 China Life Insurance Company Limited(601628) )
Event: China Life Insurance Company Limited(601628) disclosed 2021 annual report in March 24th, and the company’s operating income and net profit respectively increased by 4.1% and 1.3% to 858 billion 500 million yuan and 50 billion 900 million yuan respectively, of which 750 days moving average moved down, the incidence rate of serious diseases and the assumption of surrender changed respectively the 30 billion 700 million yuan, 5 billion 900 million yuan and 1 billion 680 million yuan of pre tax profits of the company. The company’s annual NBV decreased by 23.3% year-on-year to 44.78 billion yuan, ev increased by 12.2% to 1.2 trillion yuan, the comprehensive return on investment was 4.87%, and the company’s dividend was 18.37 billion yuan, with a dividend ratio of 36.1%; The overall performance is stable and in line with market expectations;
NBV has made some correction under the high base, and the quality of the team is better than that of the peers
1. Affected by the year-on-year decrease of 26.1% in the 10-year premium of individual insurance and the decrease in the proportion of new orders for serious diseases (we expect that the proportion of new indemnificatory orders in the above new orders will decrease by 60% – 65% from 21 to 10 years), the NBV of the company will decrease by 23.3% to 44.78 billion yuan, which has been adjusted back under the high base for two consecutive years from 19 to 20 (the growth rate of NBV in 19 and 20 years is 18.6% and 0% respectively), and the correction range is at a reasonable range, The absolute value of NBV has a leading advantage of 6.88 billion yuan compared with Ping An;
2. At the end of the year, the number of personal insurance agents of the company decreased by 40.5% to 820000, but on the one hand, the average monthly production capacity of personal insurance manpower increased by 12.43% to 6237 yuan year-on-year, and the agent income increased. On the other hand, the proportion of star rated manpower and star rated members increased slightly in the month of 21. We estimate that it will reach 12% and 3.5% respectively, and the seven-month retention rate of the agent team began to rise, adding to the higher increase rate of Guoshou, We believe that the quality of Guoshou’s agent team is better than that of other Chinese funded peers;
3. In the mid-21st year, Guoshou launched the 4.0 system of normal operation of individual insurance team, including four modules: system operation, effective addition, new talent cultivation and supervisor cultivation. Compared with the 3.0 system in the past 17 years, it has made improvements in the training system of key post personnel, grass-roots implementation, the practicality of standardized courses and redefining the support group of new agents, which is a gradual reform;
The adjustment of actuarial assumptions affects profits, and the performance of investment income is stable
1. At the end of the year, the remaining margin of life insurance of Guoshou fell by 0,23% year-on-year to 834.5 billion yuan. We believe that the main reasons are the decline of the policy continuation rate and the decline of the 750 day moving average (the downward movement of the 750 day moving average reduces the contribution of NBV to the remaining margin, on the contrary, the discount rate of the effective business value of Guoshou is fixed at 10%, so it still maintains a growth of 5%). Guoshou issued a document on high-quality development in Q4 of the year 21, and issued three control lines for the continuation rate, We expect the continuation rate of 22 years to recover;
2. At the end of the 21st year, Guoshou adjusted the actuarial assumptions of the incidence rate of serious diseases and the surrender rate, which had a negative impact on the pre tax profit of 5.9 billion yuan and 1.68 billion yuan respectively, with a total drag on EV of 0.71 PCT;
3. The total return on investment and comprehensive return on investment of Guoshou in 21 years decreased by 32 and 146bp to 4.98% and 4.87% respectively year-on-year, with average performance. At the same time, due to market fluctuations, banks and other available for sale assets were impaired by 21.3 billion yuan; However, Guoshou’s long-term interest rate bonds grasp the opportunity well. On the one hand, the 21-year net investment yield bucks the trend and increases 4bp to 4.38%. On the other hand, the interest free effect of long-term interest rate bonds superimposes the impact of deferred tax, making the annual effective tax rate of Guoshou close to 0;
Investment suggestion: the overall performance of Guoshou in 21 years is stable and in line with market expectations. Affected by the sharp fluctuations in the equity market since the beginning of the year, we predict that the EV growth of the company in 22 years will be 8.02% (the previous value is 10.5%). We believe that compared with the peers, the debt side reform of Guoshou is more gradual and implemented, and the retention of the core team is also better. We expect that the year-on-year NBV situation of Guoshou in 22 years will be better than that of other Chinese funded peers, The current stock price corresponds to 0.56 times of PEV in 22 years, maintaining the buy rating;
Risk tip: the equity market has declined significantly, the long-term risk-free rate of return has continued to decline significantly, the growth rate of new single premium is not as expected, and the blue chip agents have lost a lot;
