Tianfeng Securities·2024-03-28 16:00Investment Rating - The report maintains a "Buy" rating for China Life Insurance (601628) with a target price of 28.5 CNY [1]. Core Views - The report highlights a recovery in the liability side but notes that investment performance has negatively impacted profits. The net profit attributable to shareholders for 2023 was 21.11 billion CNY, down 34.2% year-on-year, while the fourth quarter of 2023 saw a significant increase in net profit to 4.9 billion CNY, up 408% year-on-year [1]. - Investment income has sharply declined, which is the main reason for the overall performance drag in 2023. The net investment yield, total investment yield, and comprehensive investment yield for 2023 were 3.77%, 2.68%, and 3.23%, respectively, compared to -23bp, -126bp, and +131bp in 2022 [1]. - The new business value (NBV) reached 36.86 billion CNY, an increase of 11.9% year-on-year, driven by both individual insurance and bancassurance channels [1]. Financial Performance Summary - The report provides a detailed financial outlook, projecting a net profit attributable to shareholders of 23.29 billion CNY, 26.10 billion CNY, and 31.78 billion CNY for 2024, 2025, and 2026, respectively, with year-on-year growth rates of 10%, 12%, and 22% [1][3]. - The total premium and management fee income for 2023 was 641.38 billion CNY, with a projected increase to 678.41 billion CNY in 2024 [3]. - The report indicates a decrease in the NBV/EV levels due to adjustments in economic assumptions, with the internal value for 2023 estimated at 1.26 trillion CNY, a 5.6% increase from 2022 [1][3]. Business Segment Performance - The individual insurance segment reported a first-year premium of 918 billion CNY, up 12.6% year-on-year, with long-term policies (10 years and above) accounting for 53.92% of the total, an increase of 2.64 percentage points from the previous year [1]. - The bancassurance channel saw first-year premiums of 20.7 billion CNY, a year-on-year increase of 39.4%, with a significant rise in the number of active sales personnel [1]. Economic Assumptions and Valuation - The report notes adjustments in economic assumptions, lowering the investment return rate from 5% to 4.5% and the discount rate from 10% to 8%. The adjusted internal value and NBV reflect a more credible financial outlook [1]. - The report suggests that the valuation of the company could see upward adjustments due to the recovery in the liability side and potential benefits from a rebound in capital markets [1].