NCI(SH:601336) Guotai Junan Securities·2024-10-09 08:23Investment Rating - The report maintains a "Buy" rating and raises the target price to 61.40 CNY per share, corresponding to a 2024 P/EV of 0.70 times [1][5]. Core Views - Xinhua Insurance has announced a significant increase in expected net profit for the first three quarters of 2024, projected to be between 18.607 billion and 20.515 billion CNY, representing a year-on-year growth of 95% to 115%, primarily driven by improved investment performance [1][2]. - The report highlights that the recovery of the capital market and an increase in equity allocation are expected to significantly enhance investment income, which is the main driver of profit improvement [1][2]. Financial Summary - The projected net profit for 2024 is 28.072 billion CNY, a 222% increase from 2023, with EPS estimates adjusted to 9.00 CNY for 2024, 9.54 CNY for 2025, and 10.28 CNY for 2026 [4][14]. - The company's revenue is expected to rebound to 109.191 billion CNY in 2024, reflecting a 53% increase from 2023 [4][14]. - The net asset return is projected to improve significantly, with a forecasted return on equity of 23% in 2024 [4][14]. Market Performance - The report notes that the Shanghai Composite Index has increased by 12.2% year-to-date as of September 2024, compared to a decline of 4.7% in the same period of 2023, indicating a favorable market environment for Xinhua Insurance [1][2]. - The company has increased its equity asset allocation to 18.1% in the first half of 2024, up by 3.8 percentage points year-on-year, positioning it ahead of its listed peers [1][2]. Business Drivers - The demand for insurance savings has been robust, and the new management team is implementing reforms aimed at enhancing individual insurance productivity, which is expected to lead to significant improvements in team performance [1][2]. - The new business value (NBV) is anticipated to grow by approximately 61.9% year-on-year in the first three quarters of 2024, driven by strong customer demand and improved pricing strategies [1][2].