\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 336 New China Life Insurance Company Ltd(601336) )
Event:
In 2021, New China Life Insurance Company Ltd(601336) operating revenue was 222.4 billion yuan, a year-on-year increase of + 7.7%; Insurance business income was 163.5 billion yuan, a year-on-year increase of + 2.5%; The net profit attributable to the parent company was 14.9 billion yuan, a year-on-year increase of + 4.6%; Parent roe14 2%, year-on-year -1.3pct; The value of new business was 5.98 billion yuan, a year-on-year increase of – 34.9%; The embedded value was 258.8 billion yuan, up + 7.6% from the beginning of the year; The total return on investment was 5.9%, year-on-year + 0.4pct; The return on net investment was 4.3%, year-on-year -0.3pct; The dividend per share was 1.44 yuan, a year-on-year increase of + 3.6%.
Comments:
Manpower declined, new orders stabilized and per capita production capacity increased. In 2021, the company continued to clean up the deficiency of manpower. By the end of the year, the number of agents had decreased by 35.8% year-on-year to 389000 (of which 165 / 52000 had fallen off 21h1 / 21h2 respectively). In 2021, the first year premium of the company’s personal insurance channel was 18.5 billion yuan, a year-on-year decrease of – 12.3%, a decrease of only 0.1pct compared with the first three quarters, of which the first year premium of medium and long-term insurance was 15.4 billion yuan, a year-on-year decrease of – 0.3%, a decrease of 1.3pct narrowed compared with the first three quarters, realizing marginal improvement. Thanks to the brilliant performance of Bancassurance channels, the first year premium of long-term insurance in 2021 was 25.2 billion yuan, a year-on-year increase of + 9.5% (of which 21q4 was + 378.0%), driving the company’s first year premium of long-term insurance in 2021 to increase by 5.0% to 41 billion yuan (of which 21q4 was + 92.9%), and the total new orders increased slightly by 0.1% to 46.6 billion yuan (of which 21q4 was + 54.1%) year-on-year. Meanwhile, the average per capita comprehensive capacity of the company in 2021 (= average monthly first year premium / Average Monthly Scale manpower) was 2725 yuan, a year-on-year increase of + 4.1%, an increase of 17.3pct compared with 21h1.
Nbvm declined and NBV was temporarily under pressure. It is expected that due to the impact of the reform of human resources channels, the proportion of the first year’s premium of the company’s long-term guaranteed products sold through agent channels will decline, while the margin of Bancassurance channel products is low. In 2021, the company’s nbvm will decline by 6.8pct to 12.9% year-on-year, resulting in the year-on-year decline of NBV by 34.9% to 5.98 billion yuan, of which 21h2 is – 52.3% year-on-year, which is temporarily under pressure. It is expected that nbvm and NBV will achieve double growth with the improvement and increase of agent team.
The investment side performed well, and the total return on investment was + 0.4pct year-on-year. In 2021, the company achieved a net return on investment of 4.3%, a year-on-year increase of – 0.3pct, which is expected to be mainly due to the year-on-year increase in the profit and loss of bid ask spread of investment assets by 53.4% to 18 billion yuan. In the face of the investment environment of “asset shortage” and “low interest rate”, the company’s total return on investment reached 5.9%, a year-on-year increase of + 0.4pct, which shows that it is ahead of the industry.
21q4 net profit attributable to the parent company was – 6.1% year-on-year, with marginal improvement. In 2021, the company realized a net profit attributable to the parent company of 14.9 billion yuan, a year-on-year increase of + 4.6%, of which 21q4 was – 6.1% year-on-year, with a decrease of 45.1pct compared with the margin of 21q3. It is expected to be mainly due to the year-on-year increase of 7.0% to 26.9 billion yuan in the premium of 21q4 company and the year-on-year increase of 28.6% to 8.5 billion yuan in the investment income (income statement caliber), Offset some negative effects on the company’s profits caused by factors such as changes in accounting estimates (a decrease of RMB 3.23 billion in pre tax profit in 21q4) and an increase in surrender (a year-on-year increase of 35.5% to RMB 4.67 billion in 21q4).
Profit forecast and rating: the company is actively promoting the transformation and upgrading of agent channels, and NBV is under pressure temporarily. With the improvement of the quality of agent team, it is expected that the sales of high-value products will pick up in the future. The company will actively layout the health care industry, and industrial coordination is expected to drive the profit growth rate of the company to achieve repair. Considering the decline of 21q4 net profit of the company, there is still room for decline of agents and the uncertainty of economic situation outside China, we lowered the forecast of net profit attributable to the parent company from 2022 to 2023 by 19.2% / 19.9% to 21.2/34.1 billion yuan, and increased the forecast of net profit attributable to the parent company in 2024 by 39.2 billion yuan. At present, the company’s share price remains at a historical low of “H / 0”, with a corresponding rating of “19.0” for the company.
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.
