Guosen Securities released a research report stating that PICC P&C (02328) is a rare symbol in China's property insurance industry. Property insurance has the characteristics of high participation threshold, large capital investment, and sensitivity to new technology application, and the "moat" effect is obvious.
The bank continues to point out that as a leading enterprise in China's property insurance industry, PICC P&C has advantages in network services, business scale and data reserves. The company demonstrates stronger cost control and profit making ability, empowers sustainable growth of the liability side, has an underwriting profit level higher than the industry average, and maintains an ROE of more than 10%. 1) Motor insurance: Grasp multi-dimensional advantages to improve underwriting profitability. As of the end of December 2023, the company's motor insurance premiums reached 285.63 billion yuan, ranking first in the industry, and it is determined that the subsequent advantages can be maintained. 2) Non-motor insurance: The contributions of medical insurance, agricultural insurance, liability insurance, and corporate property insurance to the main premium income growth, combined with the performance of sitting in industry's leading position, may become an important contribution to the company's "second growth". Under the background of the current downward trend of long-end interest rates, and the influence of the demand for funds on the liability side, the duration of the liability of property insurance is short, the risk of interest rate spread loss is small, and the company's asset investment follows a "fixed income +" strategy.
The bank expects the company's net income attributable to the parent from 2024 to 2026 to be 28.418/31.982/34.243 billion yuan, corresponding to growth rates of 15.6%/12.5%/7.1%; and expects the company's EPS from 2024 to 2026 to be 1.28/1.44/1.54 yuan/share. The commercial model of property insurance has the advantages of "dual-wheel drive" of assets and liabilities. In addition, given the opportunities from continuous recovery of production and life and the rise of electric vehicles, the bank predicts a reasonable target price range of 11.45-12.10 Hong Kong dollars, which still has more than 16.6% upward potential. This is the bank's first coverage of PICC P&C, with a "outperform" rating.