Zhao Yin Guo Ji·2024-03-17 16:00Investment Rating - The report maintains a "BUY" rating for the company with a revised target price of HK$96.50, implying a 1.8x FY24E P/EV [18][19]. Core Insights - The company reported a full-year Value of New Business (VNB) growth of 33% year-on-year to US$4,034 million, with Annualized New Premium (ANP) increasing by 45% to US$7,650 million, aligning with forecasts [18]. - The VNB margin narrowed to 52.6%, but improved sequentially by 3.8 percentage points to 54.5% in the second half of 2023 [18]. - The company is expected to sustain mid-double digit VNB growth in the first quarter of 2024, driven by strong momentum in the MCV segment [18]. Summary by Sections Financial Performance - The company achieved a net profit of US$3,781 million in FY23, with an EPS of US$0.33 [19]. - The return on equity (ROE) is projected to increase from 8.8% in FY23 to 15.0% in FY24E [19]. - The operating return on embedded value is expected to rise from 13.0% in FY23 to 14.2% in FY24E [15]. Valuation Metrics - The report indicates a P/Embedded Value of 1.3x for FY23, projected to decrease to 1.2x in FY24E [19]. - The dividend yield is expected to increase from 2.1% in FY23 to 2.9% in FY24E [19]. - The average risk discount rate for the group has been revised down from 10% to 9.5% [20]. Embedded Value and Growth Projections - The embedded value for FY23 is reported at US$67,447 million, with projections of US$71,790 million for FY24E [24]. - The long-term growth rate is set at 3.0%, with VNB growth expected to be 11.5% in FY24E [24]. - The company’s new business multiplier is projected to be 22.8x for FY24E [24]. Market and Economic Assumptions - The report highlights a trend of negative investment variances impacting profitability, alongside higher medical claims [18]. - The average long-term investment return is estimated at 8.6%, reflecting a prolonged low-interest-rate environment [20].