\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 336 New China Life Insurance Company Ltd(601336) )
Event: the company disclosed in the annual report of 2021 that the net profit attributable to the parent company was 14.947 billion yuan, with a year-on-year increase of 4.6% (corresponding to the year-on-year increase of – 6.1% in a single quarter in the fourth quarter); The comprehensive income attributable to the parent company was 11.162 billion yuan, a year-on-year decrease of 48.3% (corresponding to the year-on-year growth of – 52.1% in a single quarter in the fourth quarter). The fluctuation of the net profit attributable to the parent company was mainly due to the significant supplementary provision of 12.076 billion yuan, accounting for 77.1% of the pre tax profit.
Key investment points
The company adheres to the development strategy of asset liability two wheel drive, and the year-on-year growth rate of new orders is better than that of peers. In 2021, the company achieved a total premium income of 163.47 billion yuan, a year-on-year increase of 2.5%, of which the first year premium of long-term insurance was 40.962 billion yuan, a year-on-year increase of 5.0% (the year-on-year growth rates of four quarters were 10.5%, – 18.9%, – 16.5% and 92.9% respectively); The renewal premium was 116862 billion yuan, a year-on-year increase of 3.5%, accounting for 71.5% of the total premium, consolidating the basic market of the total premium. In 2021q4, under the combined action of low base and bancassurance single payment, the single quarter year-on-year growth rate of long-term insurance premium in the first year has significantly turned positive, but the gap of regular payment premium for ten-year period and above is still large, with a year-on-year decrease of 36.2% in 2021 (the single quarter year-on-year growth rates in the four quarters are 18.7%, – 51.9%, – 55.8% and – 40.8% respectively). The continuous pressure on the company’s new orders is mainly due to the severe changes in the macro environment and the continuous and repeated impact of the epidemic around. We expect that the company will still have two new orders under downward pressure in 2022, and may meet the inflection point in the second half of the year.
Personal insurance channels are weak, and the signs of inflection point of team quality have appeared. In 2021, the contribution of new orders of individual insurance / bancassurance / group insurance was 39.6% / 54.2% / 6.2% respectively (45.3% / 49.6% / 5.1% in the same period in 2020). The contribution of new orders from individual insurance channels slowed down. In 2021, the first year premium of individual insurance and long-term insurance was 15.438 billion yuan, a year-on-year decrease of 3.0% (the year-on-year growth rates in the four quarters were 13.7%, – 27.0%, – 14.4% and 4.6% respectively). The company accelerated the elimination of manpower deficiency. At the end of 2021, the marketing scale of individual insurance had 389000 manpower, a year-on-year decrease of 35.8% and a month on month decrease of 11.8% compared with the medium term; The average monthly qualified manpower was 91000, a year-on-year decrease of 28.9% and a month-on-month decrease of 13.3%. Affected by the decline in manpower, the quality of the company’s team has shown signs of stabilizing, with an average monthly pass rate of 19.1%, a year-on-year decrease of 4.7 percentage points, flat compared with the medium-term month on month; The monthly average per capita comprehensive capacity increased by 4.1% year-on-year, focusing on the sustainability of quality improvement.
The pressure on health insurance sales dragged down the value rate level, and the growth rate of EV slowed down. From the perspective of value contribution, the company will realize nbv59 in 2021 RMB 8 billion, with a year-on-year decrease of 34.9% (the year-on-year growth rate in the first and second half of the year was – 21.7% and – 41.2%). In terms of attribution, the new order decreased by 0.6% year-on-year, and nbvmargin (FYP caliber) decreased significantly by 6.8 PCT year-on-year To 12.9%. We estimate that the nbvmargin of the company’s personal insurance and bancassurance channels are 38.4% and 6.5% respectively (43.9% and 4.4% in 2020). This is mainly due to the large gap in health insurance sales. The bancassurance channel has improved under the vigorous development of regular delivery business and deepening cooperation with key channels. In 2021, the contribution of traditional insurance / dividend insurance / new health insurance policies was 34.9% / 44.6% / 20.5% (27.4% / 46.0% / 26.5% in 2020). At the end of 2021, the embedded value reached RMB 258824 billion, an increase of 7.6% over the end of 2020 (the growth rate in the first and second half of the year was 4.2% and 3.2% month on month). The annualized roev decreased from 15.2% in 2020 to 10.6% in 2021. This is mainly due to the slowdown of NBV growth and the deviation of operation and economic experience, which turned negative from 6.2% in 2020 to – 0.6% in 2021. Pay attention to the recovery of subsequent insurance policies.
Consolidate the whole year’s investment and increase the profit margin. At the end of 2021, the investable assets increased by 12.1% to 1.08 trillion yuan compared with the end of 2020 (the month on month growth rate in the first and second half of the year was 1.4% and 10.6% respectively, and the table expansion was accelerated in the second half of the year). The annual net / total investment return in 2021 was 4.3% / 5.9% (year-on-year – 0.3pct / + 0.4pct.), The net / total investment income increased by 6.5% / 23.5% year-on-year, significantly better than the average of peers, thanks to the profit and loss of bid ask spread of the company’s investment assets.
Investment suggestion: the annual report performance in 2021 basically meets the market expectation, and the profit forecast is lowered due to the significant provision of reserves. We estimate that the net profit attributable to the parent company from 2022 to 2024 will be 15.6 billion yuan, 17.9 billion yuan and 20.1 billion yuan respectively (originally predicted to be 18.3 billion yuan and 22.2 billion yuan from 2022 to 2023), with a year-on-year growth rate of 4.4%, 15.4% and 12.7%; As of March 29, 2022, the company’s share price corresponds to pev0.5% from 2022 to 202438, 0.35 and 0.32 times, taking into account the valuation price ratio, continue to maintain the “buy” rating.
Risk tips: 1) the sales of follow-up guarantee products are less than expected; 2) Equity market oscillation suppresses investment returns.
