China Taiping (00966) cleared historical risks on the asset side in the interim report; the growth rate of NBV on the liabilities side far exceeded expectations, and is expected to maintain a leading advantage for the whole year.
According to the financial news app, China Merchants Securities released a research report stating that the corresponding PEV of China Taiping (00966) stock in 2024 is only 0.11 times, and the expected future upside space is large. The strong contrast between undervalued low holdings and basic high prosperity continues to maintain a 'strong recommendation' rating. The company's interim report continues to show strong performance, with a significant improvement in investment income and the gradual clearance of historical risks on the asset side; the growth rate of NBV on the liabilities side far exceeded expectations, and it is expected to maintain a leading advantage for the whole year.
The main points of China Merchants Securities are as follows:
The growth rate of life insurance NBV exceeded expectations, and the value creation ability of silver insurance has significantly improved.
1) The company achieved a life insurance NBV of 6.694 billion RMB in H1 2024, a year-on-year increase of +83.6% on a non-recurring basis, and +108.3% on a restated comparable basis, which is expected to be the best among listed insurance companies, and is expected to significantly outperform the industry for the whole year; NBVMargin is 24.6%, up by +12.4pt year-on-year, mainly due to the combined report of silver insurance, optimized product structure, and the impact of the planned interest rate reduction;
2) In terms of different distribution channels, individual insurance and long-term insurance first-year premium income increased by +11.7% year-on-year, NBV increased by +59.8% year-on-year, and NBVMargin increased by +8.9pt to 27.5% year-on-year; silver insurance long-term first-year NBV increased by +303.7% year-on-year, and NBVMargin increased by +16.4pt to 20.0% year-on-year.
3) The number of agents is 0.228 million, a net decrease of 0.007 million from the beginning of the year, and the manning level is basically stable, expected to rebound within the year; the average monthly original premium per person is 23,415 RMB, up by 62.5% from the beginning of the year, with a significant improvement in team quality.
The renewal rate of individual insurance and bancassurance in December 4) was 98.8% and 98.6% respectively, and the renewal rate in 25 months was 95.1% and 97.8% respectively, always maintaining a leading level in the industry.
The life insurance EV was 243.5 billion RMB, an increase of 9.5% compared to the beginning of the year; the margin of the contract service was 195.9 billion RMB, an increase of 2.8% compared to the beginning of the year.
Property insurance and reinsurance benefits continue to improve.
1) In the first half of 2024, the company's domestic property insurance achieved insurance service revenue of 16.663 billion HKD, a year-on-year increase of 3.5%, with auto insurance and non-auto insurance accounting for 55.4% and 44.6% respectively, and the business structure continued to be optimized; the comprehensive cost ratio was 97.0%, a year-on-year decrease of 0.6pt. 2) Reinsurance achieved insurance service revenue of 4.333 billion HKD, a year-on-year decrease of 11.9%, with life insurance and non-life insurance accounting for 24.7% and 75.3% respectively; the comprehensive cost ratio was 96.7%, a year-on-year decrease of 9.1pt.
Equity investments significantly outperformed the market.
At the end of the second quarter, the group's investment assets were 1476.4 billion HKD, an increase of 9.4% compared to the beginning of the year; OCI stock holdings amounted to 37.3 billion HKD, a net increase of 14.9 billion HKD compared to the beginning of the year, and the high dividend strategy holdings performed well, driving the overall stock comprehensive investment return rate to 15.6%, a year-on-year increase of 1.38pt to 5.27%; in the context of low interest rate levels, the company's annualized comprehensive investment return rate benefited from the bull market in bonds, which increased by 2.62pt to 5.58% compared to the previous year. In addition, the company's real estate debt financial product investment was approximately 18.4 billion HKD, accounting for a total asset proportion of 1.1%, a decrease of 0.3pt from the end of last year, with strong debt repayment ability of the financing entity.
Net income continues to grow by double digits.
In the first half of 2024, the company achieved a net profit attributable to shareholders of 6.027 billion HKD, a year-on-year increase of 15.4%; among which the insurance service performance increased by 38.0% year-on-year, the net investment performance increased by 360.7% year-on-year, and the pre-tax profit increased by 110.7% year-on-year, but the tax expenses increased significantly by 7.227 billion HKD. The operating net profit growth rates of various business segments were 4.9% for life insurance, 100.3% for domestic property insurance, 74.5% for overseas property insurance, and 183.3% for asset management.
