中国人寿：4Q net profit could decline despite better capital market

Investment Rating - The report maintains a "BUY" rating for China Life, with a target price of HK$20.00, indicating a potential upside of 38.1$14.48 [3][8]. Core Insights - China Life expects a significant increase in net profit for FY24, projecting growth of 122%-144% YoY under IFRS, translating to RMB56.2-66.4 billion, and 100%-120% YoY under ASBE, amounting to RMB51.2-61.4 billion. This is a decrease from the 174% increase observed in the year-to-3Q24 [1][8]. - The potential decline in 4Q net profit is attributed to investment volatilities, despite a strong capital market performance in 3Q24, which boosted total investment income by 152.4% YoY in the first nine months of FY24 [1][8]. - The company is adjusting its strategic asset allocation, increasing exposure to high-dividend yield stocks and balancing equity exposure between FVTPL and FVOCI [1][8]. Financial Performance Summary - For FY24, net profit is expected to range from RMB102.4 billion to RMB112.6 billion, with a projected net profit of RMB110.857 billion for FY24, a significant recovery from RMB47.547 billion in FY23 [2][9]. - EPS is forecasted to be RMB3.85 for FY24, a decrease from the previous estimate of RMB4.45, while FY25 and FY26 EPS are projected at RMB2.68 and RMB2.81 respectively [2][8]. - The company anticipates a 19.2% growth in NBV for FY24 and 9.2% for FY25, supported by a total premium growth of 4.7% YoY to RMB671.7 billion in FY24 [1][8]. Valuation Metrics - The stock is currently trading at 0.24x FY25E P/EV and 0.67x FY25E P/BV, with an expected annualized ROE of 21% in FY24 [1][8]. - The projected dividend yield for FY24 is 8.6%, reflecting an increase in DPS, although it may not match the earnings growth due to the unsustainable nature of net fair value gains [1][8].