\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 628 China Life Insurance Company Limited(601628) )
Event: the company’s q122 revenue was 343777 billion yuan, a year-on-year increase of – 8.0%, and the net profit attributable to the parent company was 15.178 billion yuan, a year-on-year increase of – 46.9%, with a weighted average roe3.5% 22%, year-on-year -3.01pct. NBV – 14.3% yoy. The annualized net return on investment was 4.00% and the total return on investment was 3.88%, with a year-on-year rate of – 8bp and – 256bp.
Performance attribution: [insurance business continues to be under pressure, but shows a stable and positive trend] q122 premium income is 315011 billion yuan, a year-on-year – 2.7%, including 100895 billion yuan of new policy premium, a year-on-year-1.5%, and 214116 billion yuan of renewal premium, a year-on-year-3.3%. It is noteworthy that the first-year premium was 65.366 billion yuan, a year-on-year decrease of – 4.3%, which was significantly narrowed compared with – 10.2% in the same period last year. In addition, the proportion of ten-year and above premiums in the company’s first-year premium increased steadily. We judge that the company’s nbvm may be in the process of gradual improvement. [the sharp decline in total investment income dragged down the performance] q122 company’s total investment income was 44.558 billion yuan, a year-on-year – 31.6%. There was a large retreat in the equity market, and the company’s investment income was under pressure, which was the main reason to drag down the growth of revenue. At the end of the period, the company’s total investment assets were 4.72 trillion yuan, basically the same as at the beginning of the year, still ranking first among listed insurance enterprises. [maintain a high level of solvency] from q122, the insurance industry will prepare solvency reports in accordance with the second generation “phase II rules”. At the end of the period, the company’s core and comprehensive solvency adequacy ratios are 176.39% and 247.60% respectively, compared with the “phase I rules” – 65.31pct and -2.35pct.
The decline in manpower narrowed and the business quality improved: at the end of q122, the total sales manpower was 846000, down – 4.9% from the beginning of the year, including 780000 for individual insurance, down – 4.9% from the beginning of the year. The company insists on promoting the transformation of agents to specialization and professionalism. After experiencing a significant loss of manpower in 2021, the company’s sales team is generally stable. Next, we need to focus on the per capita production capacity. The surrender rate of q122 was 0.28%, year-on-year – 0.1pct, and the surrender fund was 10.315 billion yuan, year-on-year – 16.2%. We believe that the improvement trend of the company’s business quality is sustainable.
Investment suggestion: considering that there are still many uncertain factors in the capital market, we lowered the assumption of the company’s return on investment, and based on this, we lowered the company’s profit forecast for 202224 by 8.5%, 5.9% and 3.0%. The current share price of the company corresponds to 2022ep / ev0 56x, still at an all-time low, maintaining the “Buy-A” rating.
Risk tips: the loss of agents exceeds expectations, the per capita production capacity is less than expected, and the fluctuation of capital market is intensified.
