\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) China Pacific Insurance (Group) Co.Ltd(601601) 601)
Matters:
The company released the first quarter report of 2022. In the first quarter, the net profit attributable to the parent company was 5.4 billion yuan (YoY – 36%), the total premium of life insurance was 99.5 billion yuan (YoY + 4%), and the total premium of property insurance was 49.9 billion yuan (YoY + 14%).
Ping An View:
Life insurance: team transformation, pressure on scale, sharp decline in new individual insurance orders, and bancassurance helped increase the total number of new orders. NBV is expected to be significantly under pressure. 22q1 has a total of 28.4 billion yuan (YoY + 22%), including 9.2 billion yuan (YoY – 44%) for individual insurance, 8.1 billion yuan (YoY – 44%) for individual insurance and 11 billion yuan (YoY + 1108%) for bancassurance. In 22q1, the company comprehensively launched the phase I project of “long voyage action”, strengthened the agent team, increased the number of core manpower month on month and per capita production capacity, and the monthly per capita FYP of agents was + 19.9% year-on-year; The retention of new employees was optimized to help improve business quality. The 13-month policy continuation rate was 89.0% (YoY + 5.3pct). However, with the reduction of the overall team size and the high base of 21q1 new orders, the new individual insurance orders decreased significantly. Although the restart of value bancassurance helps the growth of new orders, the overall value contribution is limited. It is estimated that the overall NBV of 22q1 is about – 50% year-on-year.
Property insurance: Auto Insurance continued to be repaired, and the comprehensive cost rate decreased steadily. 22q1 property insurance premium was 49.9 billion yuan (YoY + 14%), including 24.4 billion yuan (YoY + 12%) for auto insurance and 25.4 billion yuan (YoY + 16%) for non auto insurance, maintaining a rapid growth. The loss ratio of property insurance is 70.4% (YoY + 1.8pct), the expense ratio is 28.7% (YoY – 2.0pct), and the comprehensive cost ratio is 99.1% (YoY – 0.2pct).
The equity market fell significantly, the long-term interest rate fluctuated at a low level, and the rate of return on investment fell, dragging down the net profit attributable to the parent company. 22q1 investment income was only 18.3 billion yuan (YoY – 33%), with a total investment return of 3.7% (YoY – 0.9pct) and a net investment return of 3.7% (YoY – 0.2pct). According to the quarterly solvency report, the comprehensive investment return of life insurance and property insurance were – 0.3% and – 0.2% respectively.
Investment suggestion: the transformation of life insurance is still at the bottom, and auto insurance helps the repair of property insurance business. The macro environment outside China intensifies market fluctuations. We adjust the assumptions of new orders, nbvm, return on investment and discount rate of reserves. The EVPs forecast from 2022 to 2024 is adjusted from 57.08 yuan, 62.79 yuan and 68.86 yuan to 57.83 yuan, 63.85 yuan and 70.26 yuan respectively. The current stock price of the company corresponds to about 0.35 times of PEV in 2022 and maintains the “recommended” rating.
Risk tips: 1) the equity market fluctuates greatly, β Property led to increased volatility of the sector market. 2) The number of agents continued to decline, the quality improvement was less than expected, and the new orders fell more than expected. 3) The interest rate is lower than expected, and the allocation of maturing assets and new assets is under pressure. 4) The average vehicle premium fell more than expected, the loss ratio increased more than expected, and the underwriting profit of vehicle insurance was under pressure.
