Investment Rating - The report maintains a "BUY" rating for the company, with a new target price of HK18.00 [4][6]. Core Insights - The company experienced a positive VNB growth of +30.7% YoY in 1Q24, outperforming peers such as China Life and Ping An [2]. - The net profit attributable to shareholders grew by +1.1% YoY to RMB 11.8 billion in 1Q24, marking a turnaround after three consecutive quarters of decline [2][9]. - The insurer's life underwriting focus has shifted back to agency distribution, with agency FYP increasing by +31.3% YoY [2][10]. - The bancassurance channel faced challenges, with FYP declining by -21.8% YoY, although this was an improvement from a -54.6% decline in the previous quarter [2][11]. - The report highlights the potential for margin expansion due to the ongoing Changhang Transformation initiated in 2022 [2][6]. Summary by Sections Financial Performance - The company's net profit for FY23 was RMB 27.9 billion, with an expected increase to RMB 32.2 billion in FY24 [3]. - The EPS is projected to rise from RMB 2.83 in FY23 to RMB 3.30 in FY24 [3][15]. - The company reported a total insurance revenue of RMB 266.2 billion in FY23, with an expected increase to RMB 281.6 billion in FY24 [14]. Valuation Metrics - The stock is currently trading at 0.29x FY24E P/EV and 0.61x FY24E P/BV, with the new target price implying 0.40x FY24E P/EV and 0.84x FY24E P/BV [6][7]. - The report indicates a conglomerate discount of 10% applied to the valuation [5]. Operational Metrics - The company's first-year premiums (FYP) for 1Q24 were RMB 32.8 billion, a slight increase of +0.4% YoY [2][11]. - The agency channel's FYRP and FYSP grew by +25.4% and +44.5% YoY, respectively, indicating a strong recovery in agency productivity [2][10]. - The combined ratio for P&C insurance improved slightly to 98.0% in 1Q24 from 98.4% in 1Q23 [12]. Investment Performance - The net investment results showed a decline of -26.1% YoY, primarily due to a drop in net interest income and a shift from a gain to a loss in investment income [2][9]. - The total investment assets increased by 4.2% YoY to RMB 2,344.8 billion [13]. Solvency Ratios - The core solvency ratio for CPIC Life was reported at 107.9% in 1Q24, down from 117.0% in 4Q23 [11]. - The comprehensive solvency ratio was 195.8% in 1Q24, reflecting a decrease from 209.8% in the previous quarter [11].
VNB growth accelerated; NP turned positive YoY