NCI(SH:601336) GF SECURITIES·2024-10-11 01:41Investment Rating - The report maintains a "Buy" rating for both A and H shares of the company [4]. Core Views - The company expects a significant increase in net profit for the first three quarters of 2024, projected between CNY 186.1 billion and CNY 205.2 billion, representing a year-on-year growth of 95% to 115% [2]. - The substantial growth in net profit is driven by improved investment performance, with a doubling of net profit in Q2 and a strong recovery in Q3, where net profit is expected to range from CNY 75.2 billion to CNY 94.3 billion, compared to a loss of CNY 4.4 billion in the same period last year [2]. - The company holds a high proportion of stocks and funds, with 18.1% of its portfolio in equities, the highest among listed insurance companies, contributing to a significant increase in fair value [2]. - The report highlights a favorable macroeconomic environment, with a 40 basis point decline in the 10-year government bond yield, enhancing the fair value of fixed-income assets [2]. - The company anticipates continued growth in value due to the retirement of 3% products and strong growth in new business value (NBV), which is expected to lead the industry [2]. Financial Projections - The projected earnings per share (EPS) for 2024-2026 are CNY 5.2, CNY 6.8, and CNY 7.5 respectively [2][9]. - The estimated embedded value (EV) growth rates for 2024-2026 are 12%, 9.4%, and 8.7% respectively, driven by rapid NBV growth and improved investment performance [8]. - The report forecasts a net profit growth of 87.8% in 2024, followed by 30% in 2025 and 9.8% in 2026 [8]. Valuation - The report assigns a reasonable valuation of 0.65X PEV for A shares and 0.3X for H shares, translating to a target price of CNY 58.46 per share for A shares and HKD 29.64 for H shares [2][9]. - The current market conditions are expected to support further valuation recovery, with the average PEV for comparable companies being significantly higher [9].