According to the research report released by GTJA Securities, considering the comprehensive improvement in business quality exceeding expectations, they have maintained a "shareholding" rating for China Taiping (00966) and raised the target price to HKD 13.59 per share, corresponding to a P/EV ratio of 0.22x for 2024.

GTJA stated that in the first half of 2024, the company's net income attributable to shareholders increased by 15.4% year-on-year, driven by both insurance service performance and investment income, especially the significant improvement in net investment performance, which increased by 360.7% year-on-year. The intrinsic value of the group increased by 8.1% compared to the end of last year, exceeding the bank's expectations. Considering that the company has allocated more dividend assets in its equity assets, which is beneficial for stabilizing profits, we have raised the EPS for 2024-2026 to HKD 2.14/2.51/3.10.

The research report pointed out that the NBV of the company has grown rapidly and the overall improvement in business quality has exceeded expectations. In the first half of 2024, the NBV increased by 85.5% year-on-year (in HKD), mainly due to a significant improvement in value rate, which increased from 12.4% to 24.6% year-on-year. Among them, the value rate of individual insurance increased by 8.9 percentage points to 27.5% year-on-year, and the value rate of banking and insurance increased by 16.4 percentage points to 20.0% year-on-year. The value rate of other businesses increased by 13.4 percentage points to 24.6% year-on-year, mainly due to the reduction in product pricing interest rates, cost optimization brought by the integration of banking and insurance and agency channels, optimization of payment terms, and a 9.9% year-on-year increase in new individual insurance policies in the first half of the year, with long-term insurance policies increasing by 14.3% year-on-year. Secondly, further optimization of channel manpower promotes high-speed capacity growth. In the first half of 2024, the number of agents decreased by 3.0% compared to the end of last year to 2.28 million, with a month-on-month average capacity increase of 65.0% and a month-on-month average NBV increase of 145.8%. Thirdly, the overall improvement in business quality continues. In the first half of the year, the 13/25-month persistence rate for individual insurance increased by 2.6 and 5.1 percentage points to 98.8% and 95.1% respectively, and the 13/25-month persistence rate for banking and insurance increased by 0.6 and 1.9 percentage points to 98.6% and 97.8% respectively.

Property insurance profits improved and investments made a turn for the better. The total premium income of domestic property insurance in the first half of 2024 increased by 1.7% year-on-year. The adjustment of business structure resulted in slow growth, but the improvement in business quality was evident, with a year-on-year decrease of 0.6 percentage points in the combined ratio of property insurance to 97.0%. The investment performance in the first half of 2024 improved significantly, mainly due to the buy-sell spread of equity assets. The annualized net investment yield was 3.47%, a year-on-year decrease of 0.16 percentage points, mainly due to the impact of downward long-term interest rates; the annualized total investment yield was 5.27%, a year-on-year increase of 1.38 percentage points, expected from the good returns on dividend assets in the first half of the year; the unaudited comprehensive investment yield was 5.58%, a year-on-year increase of 2.62 percentage points, expected from the inclusion of OCI bond gains in investment income.