\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 628 China Life Insurance Company Limited(601628) )
Event: China Life Insurance Company Limited(601628) disclosed the quarterly report of January 22 on April 27. During the reporting period, the company’s revenue and net profit attributable to the parent decreased by 8% and 46.9% year-on-year to RMB 343.8 billion and RMB 15.18 billion respectively. The sharp decline in net profit was mainly due to the impact of equity investment and discount rate. The debt side performed well, and the decline of – 14.3% NBV was much better than that of other listed peers;
The advantage of new single term payment continues to expand, NBV decline is far less than that of the same industry: the new single term payment of 22q1 and the payment over 10 years decreased by only 4.3% and 2.8% respectively compared with the same period last year. We expect that in the first quarter, the share of individual insurance periodic payment of Guoshou in the old seven companies will increase 6pct to 51%, and the advantage will be further expanded; The NBV decline of – 14.3% in the first quarter of Guoshou was also much better than that of other listed peers (Ping An – 33.7%, AIA Group – 18%, Taibao and Xinhua did not disclose specific figures, but the NBV decline was more than 40% according to the decline of regular payment);
The Manpower showed signs of stabilizing month on month: at the end of 22q1, the manpower of Guoshou personal insurance was 780000, down 5% from the beginning of the year, indicating that the water in the team has been gradually squeezed out with the rectification of deficiency in the past year. We estimate that the company’s staff increase rate from March to April will remain at a high position of 5% – 6%, and the effective active manpower accounted for about 55% in the first quarter, Guoshou’s product strategy this year has a sense of rhythm: in March, it focused on 10-year long-term deposit insurance (the current deposit insurance includes universal insurance, and the compound rate of return is about 3% – 4%, which is attractive). In the second quarter, it began to refocus on serious illness insurance and launched a variety of new products such as Zun Enfu, aiming to obtain new customers and improve the activity rate of new people;
On the one hand, the sharp decline in the net profit of 22q1 company is due to the decrease of pre tax profit by 5.3 billion yuan due to the change of discount rate. More importantly, due to the influence of the external market, the investment income of Guoshou decreased by 20 billion year-on-year. The annualized total investment return and net investment return of the company in the first quarter decreased by 2.56 PCT and 0.08 PCT to 3.88% and 4% year-on-year respectively;
Without applying for the transition period exemption, the core solvency of csg-2 is still as high as 176.4%, which is superior to other Chinese peers (the core solvency of Ping An, CPIC, Xinhua, Taiping and picc-life at the end of the quarter is 142.5%, 147%, 144.2%, 111.6% and 135.8% respectively in most cases of applying for the transition period). Therefore, csg-2 has little restriction on its dividend rate. We think the focus of the company this year will be the correction continuation rate, The surrender rate of 22q1 company decreased by 0.1pct to 0.28% year-on-year. We expect that the proportion of self insured parts of the company at the end of the first quarter is 6-7pct lower than that of Ping An and other peers;
Investment suggestion: Although the net profit data of 22q1 Guoshou is not ideal due to the influence of investment and discount rate, it is still a bright spot because it is much better than the NBV of the same industry and the high level of capital adequacy ratio. Moreover, the company’s success in timing interest rate bonds in the past few years makes us agree with its long-term investment ability. Due to the increased volatility of the equity market since April and the upgrading of epidemic prevention measures in some provinces and cities, the agent activity rate has decreased, We predict that the company’s EV growth in 22 years will be 6.98% (the previous value is 8.02%), and the current share price corresponds to 0.56 times of PEV in 22 years, maintaining the buy rating;
Risk tip: the equity market has declined significantly, the long-term risk-free rate of return has continued to decline significantly, the growth rate of new single premium is not as expected, and the blue chip agents have lost a lot;
