\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 628 China Life Insurance Company Limited(601628) )
Event:
China Life Insurance Company Limited(601628) released the report for the first quarter of 2022: in 2022q1, the company achieved operating income of 343.8 billion yuan (yoy-8.0%), premium income of 315 billion yuan (yoy-2.7%), nbvyoy-14.3%, surrender rate of 0.28%, year-on-year-0.1pct, net profit attributable to parent company of 15.2 billion yuan (yoy-46.9%), basic earnings per share of 0.54 yuan / share (yoy-46.9%), total investment rate of return of 3.88%, year-on-year-2.6pct, and core solvency adequacy ratio of 176.39% under the new regulations of the second generation, The comprehensive solvency adequacy ratio was 247.60%.
Comments:
The premium income increased negatively and the business structure was optimized. In 2022q1, the company achieved a premium income of 315 billion yuan (yoy-2.7%), a negative growth compared with the same period last year (YoY + 5%), which was mainly affected by the repeated epidemic in many places in China in the first quarter, the blocked development of insurance business and the difficulty in releasing consumer demand. The company achieved 65.4 billion yuan (yoy-4.3%) of first-year regular premium, with a significant slowdown compared with the same period last year (yoy-10%), of which 19.1 billion yuan (yoy-2.8%) of first-year regular premium for ten years and above, accounting for an increase in the proportion of first-year regular premium. In the first quarter, the company adopted the business strategy of “firm strategy and flexible tactics”, which partially alleviated the negative impact of the epidemic. It is expected that the subsequent companies will actively adjust their strategies according to the actual business conditions, and the performance pressure is expected to be released.
The agent team improved the quality and quantity, and NBV continued to be under pressure in the short term. The company adheres to building a high-quality agent team, strengthening the growth and education of excellence, and promoting the professional, professional and digital transformation of the team. By the end of the first quarter, the company had 846000 total sales manpower (yoy-37.7%), a decrease of 4.9% over the beginning of the year, including 780000 individual insurance sales manpower (yoy-39.2%), a decrease of 4.9% over the beginning of the year, and the decline in the number of agents slowed down compared with the same period last year. Affected by the epidemic in the short term, the development of new single business continues to be under pressure, with NBV – 14.3% year-on-year. If the epidemic situation is alleviated or improved in the follow-up.
Pressure on investment income significantly dragged down the growth of net profit. By the end of the first quarter, the total investment assets of the company were 4717.7 billion yuan (YoY + 10.2%), and the total investment income was 44.6 billion yuan (yoy-31.6%), which was mainly affected by the high base in the same period last year and the low interest rate level in China in the first quarter of this year, the short-term fluctuation of the equity market and the large withdrawal range. The company always adheres to the concept of value investment and steady investment, and appropriately allocates medium and short-term fixed income products according to the market situation to alleviate the allocation pressure. 2022q1 company’s total return on investment was 3.9%, year-on-year -2.6pct, and net return on investment was 4.0%, year-on-year -0.1pct. The decline in investment income dragged down the growth of the company’s net profit. In 2022q1, the company realized a net profit attributable to the parent company of 15.2 billion yuan (yoy-46.9%).
Solvency remained high under the new regulations of Solvency II. In 2022q1, under the phase II rules, the company’s core solvency adequacy ratio was 176.39%, and the comprehensive solvency adequacy ratio was 247.60%, both of which maintained a high level, with sufficient core capital and overall capital. The core solvency adequacy ratio has decreased significantly under the phase II rules. If the phase I rules are adopted, the core solvency adequacy ratio and comprehensive solvency adequacy ratio of 2022q1 company are 241.70% and 249.95% respectively. In the increasingly complex environment outside China, the company has always adhered to the origin of insurance, promoted steady growth of performance, paid attention to risk prevention and control, and is expected to maintain a high solvency for a long time under the new regulations.
Profit forecast and rating: with the in-depth promotion of “improving quality and stabilizing quantity” of the company’s agent team, the clearing rate slows down. It is expected that the growth rate of premium income and NBV is expected to pick up in the future with the empowerment of high-quality manpower China Life Insurance Company Limited(601628) as a leader in the industry, it has a sound business, investment and risk control system. In the long run, its performance still shows a good trend. However, considering that the company’s business income and investment income are under obvious pressure due to the epidemic and fluctuations in the equity market in the short term, we lowered the forecast of the company’s net profit attributable to the parent company from 2022 to 2024 by 12.2% / 10.3% / 9.4% to 73.27/927.1/106.54 billion yuan. At present, the corresponding PEV of a / H share price to the company in 22 years is 0.55/0.20, Maintain the “buy” rating of a / H shares.
Risk warning: the premium income is less than expected; The epidemic situation repeats on a large scale; Interest rates fell more than expected.
