Investment Rating - The report assigns a "Buy" rating to the company, with a target price of HKD 13.14 per share based on a 1.1 times price-to-book ratio for 2024 [4][28]. Core Views - The company reported a net profit attributable to shareholders of RMB 24.57 billion for 2023, a year-on-year decrease of 15.6%, which aligns with market expectations. Despite significant external changes, the company's profitability remains relatively stable [9][23]. - The total premium income for 2023 increased by 6.3% year-on-year, driven by the essential nature of insurance products, with growth rates for motor and non-motor insurance at 5.3% and 6.4%, respectively [10][14]. - The combined ratio (COR) for the company was 97.8% in 2023, up 1.2 percentage points year-on-year, indicating a stable underwriting performance despite challenges from natural disasters and market conditions [15][20]. Summary by Sections Premium Income - The company achieved total premium income of RMB 515.8 billion in 2023, reflecting a 6.3% increase year-on-year. The growth in motor insurance was supported by a 12% increase in new car sales, while non-motor insurance growth was slightly slower due to macroeconomic conditions [10][11]. - The market share in the property insurance sector remained at 32.5%, a slight decrease of 0.2 percentage points year-on-year, indicating a stable competitive position [10][12]. Profitability - The underwriting profit for 2023 was RMB 10.19 billion, down 29.1% year-on-year, primarily due to increased claims from natural disasters and competitive pressures in the motor insurance market [15][20]. - The company maintained a combined ratio of 97.8%, with a loss ratio of 70.6% and an expense ratio of 27.2%. The company successfully implemented cost control measures to mitigate the impact of rising claims [15][16]. Investment Performance - Total investment income decreased by 1.6% year-on-year, with an investment return rate of 3.5%, down 0.3 percentage points from the previous year. The decline was attributed to a drop in the equity market, which affected overall investment performance [9][23]. - The report anticipates a recovery in profitability and return on equity (ROE) in 2024, driven by a stabilization in natural disaster losses and regulatory guidance promoting rational competition in the motor insurance sector [9][27]. Earnings Forecast - The earnings per share (EPS) for 2024-2026 are projected to be RMB 1.3, RMB 1.4, and RMB 1.6, respectively, indicating a positive growth outlook [28].
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