Dongxing Securities Co., Ltd.Liu Jiawei and Gao Xin recently conducted research on China Taiping Insurance and released a research report "China Taiping Insurance 2022 Interim Report Performance Review: Liability-side reform has begun to show results, core agent production capacity has increased". This report gave China Taiping Insurance an increase rating, believing that its target price is 30.30 yuan, the current stock price is 20.03 yuan, and the expected increase is 51.27%.
China Pacific Insurance (601601)
China Pacific Insurance announced its 2022 interim report. During the reporting period, the company achieved operating income of 255.104 billion yuan, a year-on-year increase of 1.0%; net profit attributable to shareholders was 13.301 billion yuan, a year-on-year decrease of 23.1%. The value of new life insurance business was 5.596 billion yuan, a year-on-year decrease of 45.3%. At the end of the period, the group's contained 509.078 billion yuan, an increase of 2.2% from the end of 2021.
During the reporting period, the company faced continuous impact of the epidemic and violent fluctuations in the capital market, and both the company's liabilities and investment ends were under pressure. Under the influence of the epidemic, the company's agents face great difficulties in the development of the industry, resulting in the sales of high-value long-term guarantee products that rely on offline high-frequency visits and communications. The product architecture continues to tilt towards savings products. The value rate of new businesses has dropped by 14.7 percentage points year-on-year to 10.7%, dragging down the growth of new businesses' value; at the same time, under the influence of multiple internal and external factors, the continuous fluctuations in the capital market in the first half of the year put pressure on the company's investment side, with the annualized total investment yield and net investment yield falling by 1.1 and 0.2 percentage points year-on-year respectively.
Life insurance channel reform suddenly encountered the Shanghai epidemic during the critical period, and the short-term impact still needs time to digest. With frequent domestic epidemics, the growth rate of macroeconomic and residents' disposable income continues to be under pressure. In the "consumption downgrade" environment, the difference between residents' demand for insurance products and pre-epidemic differences are accelerating, and the demand for high-price protection products has declined for some time. As business expansion is already facing great difficulties, the Shanghai epidemic, which lasted for two months since April, has brought a huge impact on the company's agent increase and business development. The average monthly agent of life insurance has further dropped from 525,000 in 2021 to 312,000 in 2022H1, and at the end of June, there were only 281,000 agents, which has delayed the progress of company channel reform to a certain extent. With the increasing difficulty of increasing staff and the continuous advancement of clearing and weakness, the short-term impact of the epidemic still needs time to digest.
flaws do not conceal the merits, and the company's overall operations also showed some positive changes in the first half of the year. Under the short-term pressure of the macro economy and industry environment, the company continues to promote reforms and strives to stand out in the fierce competition in the industry. With the support of financial technology , the company accelerates the transformation of agents' "three transformations and five best" professional marketing, relying on the "core" basic law and professional sales platform, introduces professional and systematic training to empower the marketing team, creates high-capacity core manpower, and realizes the overall upgrade of the agent team. As the average monthly agent scale continues to decline, the average core manpower in January 2022H1 increased by 12,000 compared with 2021H2, and the proportion of core manpower increased from 14.0% in 2021H2 to 22.1% in 2022H1. The monthly average first-year premium income of core manpower increased by 23.5% year-on-year to 32,300 yuan, driving the company's new business value to drop from 48.6% in Q1 to 39.3% in Q2. In terms of channel, the company seized the opportunity of customers' demand for savings products to grow, implemented three value strategies, value outlets, value products, and high-quality teams, to effectively deploy regional and channel, helping the bank insurance channel's new business revenue to increase by 1125.5% year-on-year and the new business value increased by 100.1% year-on-year. In addition, the company has taken advantage of the development trend of the third pillar of pension insurance and has built a high-quality pension community "Taibao Home" around residents' pension needs, further achieving the extension and expansion of the company's insurance health care industry chain, which is expected to become an effective auxiliary to the company's life insurance business accelerated recovery.
The decline in economic growth rate coupled with the epidemic in Shanghai may make 22H1 performance a recent low, and marginal improvement in the second half of the year can be expected. It is expected that with the continuous advancement of the "Changhai Operation" reform, the gradual recovery of staffing and the accelerated accumulation of core manpower, the company's liability side will continue to improve, accumulating growth momentum for the "good start" of 2023, and the growth rate of core value indicators is also expected to rebound accordingly. At the same time, it is expected that under the combined influence of domestic and foreign factors such as the Sino-US interest rate gap, the downward space is relatively limited. The pressure on reserve provisions is expected to be alleviated and performance is expected to be gradually released.In addition, the company's positive measures in dividend distribution are also expected to enhance investor confidence in the current market environment and help valuation repair.
Investment advice: Since 2020, the downward trend of the insurance industry's prosperity has become more obvious, and the company is also facing the problem of declining premium growth and stalling value growth. The Shanghai epidemic in the first half of the year further increased the difficulty of company channel reform. However, during the epidemic in Shanghai, the company actively practiced social responsibilities, assumed more service and public welfare functions, and enhanced the company's industry reputation. We expect that as the epidemic eases, the company's brand effect is expected to gradually realize it into economic value, helping the company stabilize the "basic base" of core customers. At the same time, with the acceleration of the "Long-term Action" of life insurance, relying on an efficient training system and financial technology empowerment to improve efficiency, agent quality improvement and cost reduction and efficiency improvement at the company level are expected to continue to emerge. In addition, by building a health care industry chain and building a development paradigm for the health industry ecosystem, the company is expected to provide the company with a new "engine" of performance growth and build a new growth pole for life insurance. Overall, the above measures are expected to provide impetus for the company to gradually reverse the current adverse situation, and we are still optimistic about the company's long-term development prospects. It is estimated that the company's net profit attributable to shareholders from 2022 to 2024 will be RMB 21.874 billion, RMB 26.404 billion and RMB 30.975 billion, respectively, and maintain the "recommended" rating. The current company's valuation is only 0.36x22EVPS, which has high medium- and long-term investment value. The target price for the year is 30.3 yuan, corresponding to 0.55x22EVPS.
Risk warning: macroeconomic downward risks, policy risks, market risks, liquidity risks .
Securities Star Data Center calculates based on the research report data released in the past three years, the researcher team of CICC Yao Zeyu has conducted in-depth research on the stock, with the average prediction accuracy in the past three years as high as 92.42%. It predicts that the attributable net profit in 2022 will be 24.805 billion yuan, and the forecast based on the current price conversion PE is 7.76.
latest profit forecast details are as follows:
A total of 22 institutions have given ratings in the stock in the past 90 days, buy rating 14, and 7 ratings in the increase; the average target price of institutions in the past 90 days was 31.17. According to the financial report data in the past five years, Securities Star valuation analysis tool shows that China Pacific Insurance (601601) has good competitiveness in the industry, good profitability, and average revenue growth. The stock has a good company index of 3.5 stars, a good price index of 4.5 stars, and a comprehensive index of 4 stars. (Indicators are for reference only, indicator range: 0 ~ 5 stars, maximum 5 stars)
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