Sunshine Insurance Group - H Conference Call Summary Company Overview - Company: Sunshine Insurance Group - Period: 1H25 - Net Profit: Rmb3.4B, exceeding JPMe estimate of Rmb3.0B - New Business Value (NBV): Rmb4.0B, up 47% year-on-year (oya) on a like-for-like basis [1][3] Key Positives - Contractual Service Margin (CSM): - CSM balance reached Rmb56B as of June 2025, growing at 10.3% half-on-half (H/H) [2] - Indicates high visibility of steady underwriting profit primarily from CSM release [2] - Earnings Performance: - P&C's 1H25 underwriting combined ratio improved by 0.3 percentage points oya to 98.8% [2] - Overall net profit of Rmb3.4B represents a 7.8% increase oya, beating estimates [2] - Solvency Ratios: - Core solvency ratios for Sunshine Group, Sunshine Life, and Sunshine P&C are 171% (+13%p H/H), 155% (+18%p H/H), and 177% (+12%p H/H) respectively, well above the minimum requirement of 50% [2] Key Negatives/Concerns - New Life Sales Volume: - New life sales volume was Rmb19B, down 3% oya, with agency channel sales down 11% and bancassurance channel sales down 5% [3] - Indicates low new business quality, raising concerns about sustainability of in-force book growth [3] - Market Reaction: - Despite strong earnings, a negative stock reaction is anticipated due to concerns over the quality of new life sales [5][7] Likely Changes to Consensus - 1H25 net profit accounts for 59% of FY25E consensus earnings, suggesting potential marginal upward revisions to full-year consensus [4] Investment Thesis - Market Position: Sunshine Insurance Group has a composite license but has seen sluggish market share gains over the past decade [10] - Growth Outlook: Attractive CSM growth outlook indicates steady insurance profit potential, but the company requires more time to scale up its business size [10] - Risks: - Higher earnings volatility risk due to equity market movements - Capital adequacy concerns amidst falling bond yields - Imbalanced distribution channels for risk diversification [10] Valuation - Price Target: HK$2.10, implying a 5x FY25E P/E at the consolidation level [11] - Valuation Methodology: - Life Operations valued at 4x FY25E P/E - Non-life Operations valued at 3x FY25E P/E - Other business assigned 0.3x P/BV [11] Risks to Rating and Price Target - Upside risks include: - Mitigation of earnings sensitivity against equity market movements - Faster-than-expected recovery in front-book growth and new life sales - More balanced earnings contribution from the non-life segment [12]
阳光保险 - H_初步看法_2025 年上半年新业务价值（NBV）稳健（同比增长 47%），但新寿险销售疲软引发担忧