\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 336 New China Life Insurance Company Ltd(601336) )
Event:
New China Life Insurance Company Ltd(601336) released the report for the first quarter of 2022: in 2022q1, the company achieved operating income of 75 billion yuan (yoy-7.9%), premium income of 64.9 billion yuan (YoY + 2.4%), including premium income of 42.8 billion yuan (yoy-5.3%) from individual insurance channels, premium income of 21.2 billion yuan (YoY + 25.7%) from bancassurance channels, net profit attributable to parent company of 1.34 billion yuan (yoy-78.7%), basic earnings per share of 0.43 yuan (yoy-78.7%), and annualized total return on investment of 4.0%, year-on-year -3.9pct.
Comments:
The growth rate of premium slowed down, and the bancassurance channel continued to work. In 2022q1, the company achieved a premium income of 64.9 billion yuan (YoY + 2.4%), which slowed down compared with the same period last year (YoY + 8.8%), including 8.6 billion yuan (yoy-18.3%) for the first year of long-term insurance and 880 million yuan (yoy-63.3%) for the ten-year and above, which significantly dragged down the growth of total premiums. It is mainly affected by factors such as the epidemic hindering offline business development and the reduction of agent team. It is expected that new orders may continue to be under pressure. The net compensation expenditure was 12.8 billion yuan (yoy-19.3%), mainly due to the decline of maturity and annuity payment.
In terms of channels, the premium income of individual insurance channels decreased slightly to 42.8 billion yuan (yoy-5.3%) due to the blocked release of insurance demand; Bancassurance channels performed well, achieving a premium income of 21.2 billion yuan (YoY + 25.7%), with a growth rate far higher than that of the same period last year (yoy-10.1%), mainly due to the company’s increased strategic investment in bancassurance channels and actively carried out bancassurance cooperation in the past 21 years. In the follow-up, if the epidemic situation is effectively alleviated and the personal insurance channels are warmed up, the company is expected to achieve a high-quality business format with joint efforts of two channels. As corporate customers were greatly impacted by the epidemic and the insurance demand was restrained, the group channel only realized a premium income of 860 million yuan (yoy-33.2%).
Equity investment was under pressure, and the net profit attributable to the parent fell sharply. By the end of the first quarter, the company’s total investment assets were 1096.1 billion yuan (YoY + 14.5%). The company has always adhered to the wealth management strategy driven by assets and liabilities. In view of the sharp fluctuations in the equity market in the first quarter, the company has actively made corresponding layout and adjusted the allocation of large categories of assets to partially release investment risks, but the investment income is still greatly impacted. 2022q1 company’s annualized return on total investment was 4.0%, with a year-on-year rate of – 3.9pct. Superimposed on the impact of the high base of net profit in the same period last year, 2022q1 company realized a net profit attributable to the parent company of 1.34 billion yuan (yoy-78.7%), and the basic earnings per share fell to 0.43 yuan / share (yoy-78.7%).
Profit forecast and rating: the company puts forward the “excellent plan” around the construction of high-performance human team. It is expected that with the slowdown of the number of agents and the improvement of specialization level, it is expected to form a two wheel driven performance growth model of personal insurance and bancassurance channels, and the sales of high-value products may rise. Combined with the company’s active layout of wealth management and health industry, strengthen innovation empowerment, and strive to create core competitive advantages, the performance is expected to be repaired. However, considering the obvious pressure on the company’s equity investment in the first quarter, which significantly dragged down the performance growth, the repeated superposition of the epidemic in the long run, the complex and volatile macroeconomic situation outside China, and the volatility of the equity market may remain high for a long time, we lowered the company’s forecast of net profit attributable to the parent company from 2022 to 2024 by 47.8% / 49.0% / 41.9% to 11.11/174/22.8 billion yuan. At present, the PEV of a / H share price corresponding to the company’s 22-year PEV is 0.34/0.19. In view of the phased results of the follow-up individual insurance reform, the stabilization of the epidemic situation, the narrowing of fluctuations in the equity market and other factors, it is possible to catalyze the improvement of the company’s valuation and maintain the “buy” rating of a / H shares.
Risk tip: the economic recovery is less than expected; Substantial fluctuations in the equity market; The long-term interest rate was lower than expected.
