China Life Insurance (601628)： Premium structure continues to optimize equity and tax benefits to contribute profits
China Life Insurance (601628): Premium structure continues to optimize equity and tax benefits to contribute profits
Event: China Life’s operating income in the first half of 2019 increased by 12 each year.
3% to 4,572.
3.3 billion, net profit attributable to mothers grows 128 annually.
9% to 375.
99 ppm, a ten-year increase in new business value22.
7% to 345.
69 trillion, the company’s embedded value reached 8,868 in the first half.
04 trillion, an increase of 11 over the end of the previous year.
The increase in investment income and the one-time impact of tax preferential policies are the initial improvement in net profit.
The premium structure continued to be optimized and the sales team grew steadily.
(1) The company focuses on long-term guaranteed business, continuously promotes the optimization of business structure, increases the proportion of premiums paid during the period, and compresses the banking and insurance transactions.
In the first half of 2019, the company’s premiums increased by 4 per year.
9% to 3779.
7.6 billion (Ping An +9.
38%), of which the premium paid (excluding short-term insurance) decreased by 89.
9%, renewal premiums increased by 6.
4%, significant renewal pulling effect; new business value ratio of individual insurance channels increased by 4.
2% to achieve structural optimization.
(2) The sales team grew steadily.
As of the end of June 2019, the company’s individual insurance channel team size has increased by 9.
3% to 157.
30,000 people, per capita new business value increased by 15.
4% to 19,312 yuan / half a year per capita.
We believe that the increase in per capita capacity will be the key to the growth of NBV. It is expected that the company’s NBV will grow 21% annually in 2019.
Equity investments contribute elasticity, and investment returns have increased significantly.
In the first half of 2019, the company’s total investment yield was 5.
78% (up 200bps per year) (Ping An 5.
5%), net investment yield 4.
66% (flat for one year).
As of the end of June 2019, investment assets had grown earlier6.
4% to 3.
3 trillion, of which shares and funds accounted for an increase of 1.
6pps to 10.
8%, book value 3357.
Affected by the substantial growth of the A-share market in the first half of 2019, equity investments contributed to the elasticity of yield and the total investment yield increased significantly.
The stock market continues to fluctuate, and the contribution of equity investment elasticity is expected to weaken in the second half of the year.
New business value continued to drive, with embedded value growing steadily.
As of the end of June, the company’s embedded value was 8,868 trillion, an increase of 11 from the end of 2018.
5% (Ping An of China + 11%), of which the new business value contains 37% of the internal value added.
7%, and the return on investment difference is 262.
61 ppm, new business value is the main driver of incremental value.
The company’s embedded value is expected to grow by 18% annually in 2019.
The favorable tax policies have boosted profit performance in one go.
According to the Announcement on the Pre-tax Deduction Policy for Litigation Fees and Commission Expenses of Insurance Companies, the company should account for a decrease of 51 in 2018.
54 million, a one-off confirmation that during the reporting period, it increased the 2019 interim net profit and contributed 14 net profit.
Maintain “Buy” rating and raise TP to 36.
54 北京夜网 yuan.
The company’s life insurance business continued to optimize, and the return on equity investment benefited from the rebound in the stock market. It is expected to usher in a turning point in performance in 2019.
The company is currently evaluating 2019 PEV 0.
8x, lower than the historical center.
Raise the company’s profit forecast. It is estimated that the company’s net profit for 2019-2021 will be 63.4, 77.5, and 91.6 billion yuan (previously expected to be 43.0, 50.9, and 57.6 billion for 2019-2021 respectively), and the target price will be 35.
35 was raised to 36.
54 yuan, maintain “Buy” rating.
Risk Warning: The macro economy has fallen sharply; premium growth has fallen short of expectations; the market has changed significantly