VNB 增长加速 ； NP 同比转正

6May2024 CMBInternationalGlobalMarkets|EquityResearch|CompanyUpdate CPIC(2601HK) VNBgrowthaccelerated;NPturnedpositiveYoY CPICturnedtopositiveVNBgrowthby+30.7%YoYin1Q24,outpacingpeersi.e. TargetPriceHK$24.80(PreviousTPHK$29.72)Up/Downside37.8%CurrentPriceHK$18.00ChinaInsuranceNikaMA(852)39000805nikama@cmbi.com.hkMiaoZHANG(852)37618910zhangmiao@cmbi.com.hkStockDataMktCap(HK$mn)173,166.1Avg3mthst/o(HK$mn)289.952wHigh/Low(HK$)25.85/12.92TotalIssuedShares(mn)9,620.3Source:FactSetShareholdingStructureSchrodersPLC8.8%JPMorganChase&Co.7.3%Source:HKExSharePerformance AbsoluteRelative1-mth24.3%15.6%3-mth28.2%9.4%6-mth-6.0%-11.0% Source:FactSet12-mthPricePerformanceSource:FactSetAuditor:PwCRecentreports: 1.PingAn(2318HK)-1Q24NBVbeat;LifeOPATy/yturnedpositive,Apr.25,2024(link)2.ChinaLife(2628HK)–HighestVNBgrowthinyears;netprofitdeclinenarrowedontrack,May2,2024(link)3.ChinaInsurance–1Q24listedlifeinsurers’growthdwindled;P&Creboundedin3M24drivenbynon-auto,Apr.22,2024(link) ChinaLife/PingAn+26.3%/+20.7%YoYinthecorrespondingperiod(link/link).ThestrongVNBmomentumwasdrivenbymarginexpansiontoanest.15.8%,+3.7pctYoY(CMBIest),andaslightincreaseinFYPby0.4%YoYtoRMB32.8bn(Fig.3).TheGroup’snetprofittoS/Hgrewby+1.1%YoYtoRMB11.8bnin1Q24,surpassingpeersbeingthefirstamonglistedCNinsurerstorealizepositivenetprofitgrowth.Weseetheinsurer’slifeunderwritingfocusrevertedbacktoagencywiththeagencyFYRP/FYSP+25.4%/+44.5%in1Q24,whereasin4Q23was-3.6%/-53.6%YoY.TheseenhancedtherallyinagencyFYPby+31.3%YoYtoRMB16.1bn,shiftingfroma-21%declinein4Q23.Bancassurancewasanotherstory,stillconsumingimpactsonthetightenedoversightsincelastfall.Thechannel’sFYPwas-21.8%YoYin1Q24,althoughnarrowedfroma-54.6%declinein4Q23(Fig3).Weviewtheimprovedfirst-quarterprintaheadofsteambuilt-upupontheproceedingChanghangTransformation,whichhasbeeninitiatedin2022.Wethinktheregulatoryimpactonbancassurancewillgraduallyfadeoutafterthelacklustre4Q23&1Q23prints.ForP&C,CoRdroppedby-0.4pctto98%,withpremiumrisedrivenbynon-autosegment.Westayoverweightontheinsurer’sresilienceandthinktheeffectivechg.ofChanghangcoulddeliverstrongefficiencygainsoverquarters.WeadjustourTPtoHK$24.8,implying0.4xFY24EP/EV. Lifefocusbacktoagency;bancatofacehighbasein2Q24.DespitethebancassuranceFYPcutby-21.8%YoY,theinsurermanagedtoliftingtotalFYPby+0.4%YoYtoRMB32.8bn,outweighinglistedpeersi.e.ChinaLife/PingAnLife/NewChinaLife’s1Q24FYPwasdownby-4.4%/-13.6%/-45.0%YoY.Theuptickwasdrivenbyashiftoffocusbacktoagency,wherethechannel’sFYRP/FYSP+25.4%/+44.5%YoYin1Q24,pullinganFYPincreaseby+31.3%(Fig.3).VNBachievedbetter-than-expectedgrowthby+30.7%toRMB5.2bn,partiallythankstocontractedproportionsofbancassurancesales.Weestimatethemargin(FYPbasis)roseto15.8%,+3.7pctYoYin1Q24.Givenahighbaseofbancassurancebizsince2Q23,wethinkCPICmaypersistonstrengtheningagentproductivityandgroupinsurancetobalanceoutgrowth.Lookingahead,weexpectmoreupsideontheinsurer’smarginexpansiongivenprogressive advancementonChanghang,whichaddressedonqualitygrowthandstabilizedcontributionsfrombancassuranceasregulatoryimpactgraduallybottomedout. 1Q24netprofitturnaround;eyesoninvestment.TheinsurershowedresilientprofitabilityastheGroup’snetprofittoS/H+1.1%YoYtoRMB11.8bnin1Q24,suggestingaturnaroundafterdeclinesforthreeconsecutivequarterssince2Q23(Fig.2).TheprinttoppedmainpeersasChinaLife/PingAn/NewChinaLifestillentangledwithanetprofitdeclineby-9.3%/-4.3%/-28.6%YoYrespectivelyin1Q24.Netinvestmentresultsslidby-26.1%YoYduetodropsinnetinterestincome(-5.9%)andinvestmentincometurningfromRMB1.1bngainin1Q23toRMB1.5bnlossin1Q24,offsettingthefairvaluegainof+23.8%.NewTPatHK24.8.ThestockistradingatFY24E0.3xP/EVand0.6xP/BV.WeadjustourTPbasedonSOTP,withLifeEVreflectingonsensitivitychangesunderthenewactuarialassumptions(@9%,4.5%)byend-23(Fig.1).MaintainBUY.Newpricetargetimplies0.4xFY24EP/EVand0.84xFY24EP/BV(Fig.1). EarningsSummary(YE31Dec) FY22A FY23A FY24E FY25E FY26E Netprofit(RMBmn) 38,222 27,911 32,225 33,907 36,760 EPS(Reported)(RMB) 2.56 2.83 3.30 3.48 3.77 ConsensusEPS(RMB) n.a n.a 3.25 3.48 3.86 GroupEV/share(RMB) 54.0 55.0 58.0 60.9 63.8 P/B(x) 0.7x 0.6x 0.6x 0.6x 0.5x P/Embeddedvalue(x) 0.3x 0.3x 0.3x 0.3x 0.3x Dividendyield(%) 6.1 6.1 6.3 6.6 6.8 ROE(%) 12.6 12.2 12.4 12.4 12.5 Source:Companydata,Bloomberg,CMBIGMestimates PLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1 Reratingrationale SOTPforCPICGroupincl.appraisalvalueforCPICLifeandP/B-ROEforCPICP&C.Inourpreviousmodel,weadoptedappraisalvalueapproachtoderivepreviousstock’spricetargetatHK$29.72.ConcerningtheadoptionofnewEVeconomicassumptionsforCPICLifeandamountinginvestmentuncertaintiesunderIFRS9&17newaccountingstandards,weintendtorevaluethestockbasedonSOTPforCPICGroup,fromwhich1)CPICLifeisvaluedthroughappraisalvalueapproachreflectingthesensitivitymovementonvaluein-force(VIF)toembeddedvalue(EV),andvalueofnewbusiness(VNB)undernewEVassumptions;2)CPICP&CisvaluedbyP/B-ROEapproachbasedonGordonGrowth,withimpliedFY24EP/BVat0.71x;and3)Othersaremeasuredonabasisof0.7xFY24Ebookvalue.Weapplyaconglomer