\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) China Pacific Insurance (Group) Co.Ltd(601601) 601)
Event: China Pacific Insurance (Group) Co.Ltd(601601) 2021 achieved operating revenue of 440.6 billion yuan (YoY + 4.4%), and net profit attributable to parent company of 26.8 billion yuan (YoY + 9.2%). In 2021, the group’s operating profit reached 35.3 billion yuan (YoY + 13.5%). CPIC life insurance realized an insurance business income of 211.7 billion yuan (yoy-0.1%), and CPIC property insurance realized an insurance business income of 152.6 billion yuan (YoY + 3.3%). We believe that the core marginal changes include: (1) the pressure of channel transformation continued, and NBV fell by 25%. The number of new insurance companies fell by 23.5% year-on-year to nby-4pcy, As a result, NBV fell by – 24.8% year-on-year, lower than previously expected. (2) Auto insurance was stable, non auto insurance increased rapidly, and the comprehensive cost rate remained stable. The margin of comprehensive reform of auto insurance weakened, the premium of auto insurance decreased by 4% year-on-year, and the non auto insurance increased by 17% year-on-year, promoting the growth of property insurance business by 3.3%. The overall comprehensive cost rate remained stable (99%, yoy + 0pct.). (3) Dividends fell 23%, lower than expected. Affected by the implementation of phase II project of “compensation generation II”, the company lowered the dividend per share in 2021 to 1.0 yuan, with a dividend ratio of 36%, down from 50% in the same period last year.
NBV is under significant pressure, and the manpower falls off significantly, focusing on the core team. CPIC life insurance realized a premium income of 211.7 billion yuan (yoy-0.1%) in 2021. Affected by the impact of the epidemic and the weakening of insurance demand, the annual new policy premium of individual insurance was 29.2 billion yuan (yoy-0.2%). Nbvm decreased significantly to 23.5% (yoy-15.4pct.), As a result, NBV fell by 24.8% in the whole year, slightly lower than market expectations. In terms of agents, the company focused more on the core manpower and production capacity. In 2021, the average monthly agent of the company was 525000 (yoy-30%), and the average monthly performance rate was 52% (yoy-5.7pt.) The monthly average per capita new policy premium income is 4638 yuan (YoY + 42%), and the monthly average per capita number of long-term insurance items is 1.38 (yoy-13%).
The overall investment remained stable, reducing fixed income and increasing equity. By the end of 2021, the group had invested 1812.1 billion yuan (YoY + 10%), with a total return on investment of 5.7% (yoy-0.2pt.), The return on net assets is 4.5% (yoy-0.2pt.). In terms of structure, the proportion of fixed income investment was 75.7% (yoy-2.6pct), the share proportion was 12.4% (YoY + 1PCT), and the proportion of other equity investment increased significantly by 1.5pct To 8%.
Non auto insurance maintained a high increase, and the comprehensive cost rate remained stable. In 2021, CPIC property insurance realized a premium income of 154.6 billion yuan (YoY + 3.3%) and a net profit of 6.4 billion yuan (YoY + 22%). The comprehensive cost rate of property insurance was 99% (YoY + 0%), among which, the comprehensive reform of automobile insurance resulted in the decline of average vehicle premium, the premium income of automobile insurance decreased by 4% year-on-year, and the comprehensive cost rate was 98.7% (YoY + 0.8pt.). The premium income of non auto insurance business increased by 17% year-on-year, of which health insurance, liability insurance and agricultural insurance increased by 37%, 25% and 20% year-on-year respectively. From the perspective of overall operation, the marginal impact of comprehensive reform of auto insurance on auto insurance business has weakened, non auto insurance has maintained a high increase, and the comprehensive rate of auto insurance has remained stable.
The embedded value increased by 8.5% year-on-year. By the end of 2021, the company had realized the group’s embedded value of 498.3 billion yuan (YoY + 8.5%), and the company issued GDR in 20 years, resulting in a relatively high base in 21 years. Among them, NBV contributed 13.4 billion yuan (yoy-25%) and the difference contribution of operating experience was – 4.9 billion yuan, a year-on-year decrease of 4.2 billion yuan, and the deviation of investment income also changed from positive to negative, which was – 1.5 billion yuan.
Dividends fell by 23%, firm reform waiting for flowers to bloom. Affected by the implementation of phase II project of “compensation generation II”, the company plans to pay a dividend of 1.0 yuan per share, with a dividend ratio of 36%, down from 51% in the same period last year. Although the company reduced dividends and increased retained funds to cope with the decline of potential solvency in consideration of paying off the second generation phase II, combined with the current stock price of the company, the dividend rate of the company is about 4.4%, which is still significantly higher than that of its peers (Guoshou 2.6% / Ping An 3.2%). We believe that in the past two years, the company has firmly gone global, introduced long-term strategic investors, internally improved the corporate governance and incentive system, attracted high-quality management talents to join, strategically promoted the long voyage action, optimized the team structure and steadily promoted the health care industry, so as to enrich the “product + service” system. We believe that this series of reform measures will gradually achieve results.
Investment suggestion: maintain the Buy-A investment rating. It is estimated that the EPS of China Pacific Insurance (Group) Co.Ltd(601601) 20222024 will be 2.97 yuan, 3.77 yuan and 4.37 yuan respectively, corresponding to 0.4 times of 2022pev, maintaining the Buy-A rating, and the six-month target price is 32 yuan.
Risk tip: the risk of sharp fluctuations in the equity market / the risk of a large number of marketers falling off / the risk of a sharp decline in the capacity of marketers.
