China Life Insurance (601628): Revitalizing China Life and Starting a New Chapter of Reform

China Life Insurance (601628): Revitalizing China Life and Starting a New Chapter of Reform

At the current position, the market is not sufficiently predicting the firmness of the company’s transformation and execution efficiency (we get positive feedback 北京spa会所 from the company’s research from top to bottom), and the company’s sustainable value growth trend is expected to be insufficient in 2020.(High probability), too pessimistic about the company’s insufficient stock (we believe that the company is trying to accelerate the optimization of the structure by gradually improving to good new business).

1. Value: In the first half of the year, the core value indicators exceeded the expectations in an all-round way, and they were aggressive and advancing against the current trend, and are expected to gradually maintain a high-speed growth trend.

Under the value-added management policy, the quality of business development is resolutely improved. Considering the improvement of the company’s structure, NBV and EV are expected to maintain a relatively high growth trend in the future.

(1) New orders and value rate both increased. In the first half of the year, the growth rate of NBV far exceeded the industry and market expectations. It is expected that the pace of adjustment in the second half of the year and the plan for preparations for 2020 will slightly fall, but the high growth rate of 18% is still maintained.
NBV 345 in the first half.

700 million, previously +22.

7%, we simulated and calculated that 19Q2 NBV was about 17.2 billion, about + 18%. The growth rate was slightly lower than 28% of the earlier Q1, but still maintained the highest single-quarter growth rate in the industry.No signs of fatigue.

The rapid growth of NBV stems from the dual growth of value rate and new orders. Among them, the new business value rate is 27%, which has been increased 4.

The 76 averages contributed 21% to the growth of NBV, and the remaining contribution was driven by FYP growth.

From a channel perspective, the NBV of personal insurance and bancassurance are increasing in various degrees. Among them, the growth rate of individual insurance (+ 26%) is higher than that of bancassurance (+ 4%).

Looking ahead, the scale of agents is expected to climb to a historical peak again driven by the high growth of the business, and pliers will promote the sales of protection products in the second half of the year to maintain the current trend.
(2) The rebound in investment has significantly increased the EV growth rate. ROVE benefited from the rapid growth of new business value and increased by 1 to 8.

5%, slightly increasing the expected growth rate to 18%.

In the first half of the year, EVs reached 886.8 billion, an increase of 11 earlier.

5%, which surpassed market expectations, compared to 4.

8% increase 6.

Eight of them are single, the core of which is the obvious recovery of the asset side, which promotes investment bias to contribute 26.3 billion, driving EV growth3.

3%, compared to -2 in the same period last year.


The company’s ROEV was 8 in the first half of the year.

53% (annualized), although 14 away from Ping An of China.

2% is still a certain gap, but an increase of 0 compared to the same period last year.

86 single, the core stems from the growth rate of NBV exceeding the beginning of EV, which also indicates that the company is gradually improving the stable growth expectation of embedded value operating profit.

The company’s strategy of “rejuvenating China Life” is not a rejuvenation in the sense of scale alone, instead of insisting on value first, it has shifted from “scale orientation” to “organization of value and scale”.

According to our analysis and feedback, in the 2019 evaluation indicators, the company increased the value evaluation weight, and removed the scale premium evaluation indicators, focused on the futures delivery business, and concentrated resources and channels that have a large value contribution, such as large insurance andUrban areas, resolutely improve the quality of company development.

Ping An, CPIC, and Xinhua have all started value transformation strategies at an earlier stage. Whether it is the new business value rate, ROEV, or the long-term protection products, the average proportion of China Life, but it is not too late to remedy the situation, and it is clear that the current company “values”Under the strategy, we expect the company’s overall business to make a qualitative leap, and at the same time, there is room for improvement.

2. Debt side: The product structure has been significantly optimized, and the team has benefited from a successful start-up policy and peak-clearing policy to achieve an unexpected growth.

In the first half of 2019, the company’s new single premium was 1,278.

4.5 billion, an increase of 2% over the same period, of which the first year of specific insurance premiums accounted for 5% of the first year of long-term insurance premiums, and the first year of health insurance premium growth (+ 36%) was also higher than 2018 (+29).

The reason for the 5% increase is that the company still achieved positive growth under the pressure of the industry. The reason is that the company ‘s open strategy is relatively active. At the same time, after the scale target is reached, the sales of guaranteed products are gradually promoted. The scale growth and structural improvement go hand in hand.

The marketing team expanded and improved quality. The number of agents in the first half of the year was 1.57 million, an increase of 9 earlier.

3%, an increase of 2 from Q1.

35%, maintaining a quarterly growth trend, the main reason is that the company’s differentiated start-up policy has boosted the morale and income of the team, and naturally reduced the team turnover rate.

Even more gratifying is that during the gradual recovery of manpower, throughput is expected to increase significantly, with an average manpower of 150 in the first half of the year.

60,000 (simulation calculation caliber, the same below), compared with 1.51 million in the same period last year, taking into account the NBV growth rate of 22.

7% and commission and commission rates increased by 1.

28 PCT, it is expected that the per capita FYC and NBV per capita in the first half of the year will increase significantly.
The “Dingxin Project” was launched to help the reform of the resistance side continue to deepen, which is expected to promote the healthy and sustainable growth of the company’s business.
Under the strategic prospect of the new leader “Reinvigorating China Life”, the reform of the debt side is expected to continue to deepen.

Formulate and adjust the organizational structure, and strengthen the expansion capacity of the headquarters.

In 2019, the company launched the “Dingxin Project”, which integrates operational and combat-oriented organizational systems through institutional mechanisms to further strengthen and activate grass-roots production units. At the same time, it strengthens headquarters management and control capabilities, and decomposes business indicators and financial resources directly to grass-roots production units.The linkage between the headquarters and the grass-roots production units is expected to follow the pace of the head office for the development of the company’s disadvantaged side, and resolutely implement the strategy of “heavy value”; merge and revitalize key cities while consolidating the county market advantage and implement a two-handed strategy.

The company strengthened the construction of the agent team in urban areas, and recruited more high-quality urban sales teams through the tilt of resources, such as the company’s exhibition team, which is called the Ping An “Excellent Talent Program”.

3. Asset side: The equity market has clearly pushed the investment yield to soar, and the asset structure has remained relatively stable.

The company’s net investment yield in the first half of the year was 4.

66%, compared with the same period last year; total investment yield is 5.

77%, an increase of 2 percentage points from the same period of the previous year. The core reason is that the company’s fair value gains and losses and the difference between the purchase and sale of securities have changed from negative to positive; the comprehensive investment yield has reached 8.

25%, an increase of 4.

64 units.

The company’s asset allocation adheres to two principles: adhere to asset-liability matching management, strengthen linkage between capital and liabilities, and adhere to long-term investment value.

On the asset side, the company strengthens unified fund management for asset allocation. Based on the risk and correlation of asset returns, it considers the repayment of second-generation and asset-liability management constraints. It also shows a clear strategy for asset allocation through risk studies.Response cycle.

4. Investment suggestion: Maintain the company’s highly recommended level.

The signs of revitalizing China Life are now available, and the continuous advancement of reform measures in the second half of the year makes people look forward to more.

The core data of the 2019 Interim Report was comprehensively higher than expected, and the growth rate far exceeded that of the industry. The scale profit increased by 129%, and the NBV growth rate was 22.

7% (+4 for Heian period).

7%), EV growth rate is 11.

5% (over the same period + 11%).

The expected growth of NBV is 18% (originally 15%), and EV growth is 18% (original + 16%). The base cause of the gradual return to zero is expected to double the net profit of the company, which is expected to double and increase by three times.

At the same time, we are also optimistic about the new position of Wang Bin as the helmsman to revitalize China Life’s strategic thinking and policy guidelines. In the second half of the year, manpower and business are still maintaining a steady growth trend, and the change is not a slogan.

At the current position, the market is not fully expecting the company’s stable determination and execution efficiency for the transformation of the company (we have received positive feedback from the company’s research from top to bottom), and it is not enough to predict whether the company can sustain a higher value growth trend in 2020.We believe that the probability of realization is high), and we are too pessimistic about the company’s insufficient stock (we believe that the company is trying to accelerate the optimization of its structure by gradually improving its new business).

So we are optimistic about the company’s transformation and ultimately achieve good shareholder returns for investors.

The current total yuan corresponds to the company’s 2019 P / EV estimate of 0.

87X, target assessment 1.

1X, corresponding to the target price of 36.

5 yuan, 24% space.

Risk warning: the company’s transformation speed, process, and results are not up to expectations; the company’s premiums increase, and the value improves less than expected; the company’s agent team changes, the reporting rate increases, the incremental trend declines, the stock market declines sharply, and the investment yield deteriorates