\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) China Pacific Insurance (Group) Co.Ltd(601601) 601)
Event:
In 2021, 601 operating revenue was 440.6 billion yuan, a year-on-year increase of + 4.4%; Insurance business income was 366.8 billion yuan, a year-on-year increase of + 1.3%; The net profit attributable to the parent company was 26.8 billion yuan, a year-on-year increase of + 9.2%; The operating profit attributable to the parent company was 35.3 billion yuan, a year-on-year increase of + 13.5%; ROE12. 2%, year-on-year -0.4pct; The value of new business was 13.4 billion yuan, a year-on-year increase of – 24.8%; The embedded value was 498.3 billion yuan, an increase of + 8.5% over the beginning of the year; The total return on investment was 5.7%, year-on-year -0.2pct; The return on net investment was 4.5%, year-on-year -0.2pct; The dividend per share was 1.0 yuan, a year-on-year increase of – 23.1%.
Comments:
The growth rate of net profit attributable to the parent company slowed down, and the operating profit increased rapidly. In 2021, the company’s net profit attributable to the parent company was 26.8 billion yuan, a year-on-year increase of + 9.2%, a decrease of 6.3 PCT compared with the first three quarters, of which the net profit attributable to the parent company in 21q4 was 4.15 billion yuan, a year-on-year increase of – 16.0%. It is expected that the surrender rate of the company’s life insurance business in 2021 increased by 0.5 PCT to 1.7% year-on-year, and the total surrender fund increased by 54.8% to 22.3 billion yuan, of which 21q4 increased by 1.6% to 5.42 billion yuan year-on-year. Excluding the impact of short-term investment fluctuations in 2021 (2.3 billion yuan) and changes in assessment assumptions caused by changes in accounting estimates (11 billion yuan), the company realized an operating profit attributable to the parent company of 35.3 billion yuan, a year-on-year increase of + 13.5% (21h2 + 24.5%).
Life insurance: the reform continues to deepen, the per capita FYP increases, and NBV is under pressure temporarily.
(1) the agent continues to clear up the deficiency, and the regular payment of new orders and the per capita FYP increase. In 2021, the company started the reform of personal insurance channels in the direction of professionalization, specialization and digitization, and continued to clear up the deficiency of low-energy agents. The average monthly number of insurance marketers decreased by 29.9% to 525000 year-on-year, 18.1% lower than that in the first half of the year. Affected by the loss of manpower, the agent channel insurance business revenue in 2021 was 188.6 billion yuan, a year-on-year – 3.2% (21q4 year-on-year – 8.7%), of which the new insurance business was 29.2 billion yuan, a year-on-year – 0.2% (21q4 year-on-year – 25.2%), but the new insurance periodic payment business increased by 11.6% year-on-year to 24.8 billion yuan (21q4 year-on-year – 18.9%, a decrease narrowed by 20.9pct compared with 21q3). Meanwhile, in 2021, the company’s CG (MDRT level) manpower was + 170.1% year-on-year, and the per capita insurance business income of insurance marketers in the first year per month was 4638 yuan, up + 42.3% (year-on-year – 22.6% in 2020).
(2) nbvm declines and NBV is under pressure temporarily. It is expected to be mainly affected by the weak sales of long-term guaranteed products with high value rate and the popularity of annuity products with low value rate. In 2021, under the change of business structure, the company’s nbvm decreased by 15.4 percentage points year-on-year to 23.5%, and the NBV decreased by 24.8% year-on-year to 13.4 billion yuan (21h2 year-on-year – 51.9%). The growth is temporarily under pressure. The company fully launched the “long voyage plan” in 2021, officially launched the “core” basic law in January 2022, and is actively upgrading the agent team. It is expected that NBV will be released in the future.
Property insurance: the pressure of comprehensive reform of auto insurance was relieved, the proportion of non auto insurance increased, and the comprehensive cost rate remained stable. In 2021, the company’s auto insurance premium income was 91.8 billion yuan, with a year-on-year increase of – 4.0%, of which 21q4 was + 8.3% year-on-year. The pressure has been relieved since the comprehensive reform of auto insurance was completed in September 21. In 2021, the company’s non auto insurance premium income was 60.8 billion yuan, a year-on-year increase of + 16.9% (21q4 year-on-year – 5.3%), accounting for 39.9%, a year-on-year increase of + 4.6pct, mainly due to the rapid growth of business in emerging fields such as health insurance, liability insurance and agricultural insurance. In 2021, the premium increased by 37.3%, 24.6% and 19.8% year-on-year to 12.2 billion yuan, 10.9 billion yuan and 10.4 billion yuan respectively. Meanwhile, in 2021, the company’s comprehensive loss ratio (only considering CPIC property insurance, the same below) is expected to increase by 8.2pct to 69.6% year-on-year due to the decline of average vehicle premium, the increase of compensation liability of vehicle insurance and rainstorm in Henan Province (including vehicle insurance loss ratio + 10.6pct year-on-year); However, the company actively promoted cost reduction and efficiency increase. In 2021, the comprehensive cost rate decreased by 8.2pct to 29.4% (including the vehicle insurance cost rate of – 9.8pct year-on-year), keeping the comprehensive cost rate at 99.0% and flat year-on-year. Among them, the comprehensive cost rate of non vehicle insurance was – 2.4% year-on-year, and the business quality was improved.
Investment: the total return on investment is leading the industry. In 2021, while strengthening the allocation of long-term interest rate bonds to extend the duration of fixed income assets, the company appropriately increased the proportion of equity investment (compared with the end of the previous year + 2.4pct) to improve the long-term investment return, and achieved a net investment return of 4.5%, a year-on-year -0.2pct, a total investment return of 5.7%, a year-on-year -0.2pct, which remained basically stable, Performance in leading industries (in the disclosed data, the total return on investment of Ping An was -2.2pct year-on-year, Guoshou was -0.32pct year-on-year, and PICC was flat year-on-year).
Under the pressure of phase II of “compensation generation II”, the dividend per share was – 23.1% year-on-year. In 2021, the company’s dividend per share was 1.0 yuan, a year-on-year increase of – 23.1%. It is expected that the main reason is that the solvency adequacy ratio of the company is slightly negatively affected after the implementation of the second phase project of “compensation generation II”. Excluding the dividend of 0.1 yuan specially distributed by the company for the 30th anniversary in 2020, the dividend per share in 2021 decreased by 16.7% year-on-year.
Profit forecast and rating: the company is actively promoting the reform of life insurance channels. Although NBV is under pressure temporarily, by comprehensively launching the “long voyage action” and implementing the new basic law, it will promote the transformation of the agent team to high quality and specialization in the future, superimpose the company’s active layout of the health industry chain, and NBV is expected to be repaired in the future. Considering the decline of the company’s net profit in 21q4, the regional recurrence of the epidemic and the uncertainty of the economic situation outside China, we lowered the company’s forecast of net profit attributable to the parent company from 2022 to 2023 by 17.9% / 16.2% to 35.2/41.5 billion yuan, and increased the forecast of net profit attributable to the parent company in 2024 by 46.6 billion yuan. At present, the A / H share price corresponds to the company’s 22-year PEV of 0.39/0.26, and the valuation is at a historical low, maintaining the “buy” rating of a / H shares.
Risk tip: the economic recovery is less than expected; The advancement of policy reform is less than expected; The long-term interest rate was lower than expected.
