Xinhua Insurance (601336): Accelerating growth and transformation

Xinhua Insurance (601336): Accelerating growth and transformation

The company’s 18-year report announced that it achieved operating revenue of 15.42 billion yuan, a year-on-year increase of 7%; net profit attributable to mothers was 7.9 billion yuan, a year-on-year increase of 47%.

New business worth 12.2 billion in ten years1.

2%; the embedded value is 173.2 billion, which is + 13% compared with the beginning of the year.

18 years of rapid growth in performance, 19 years worth looking forward to.

The net profit attributable to mothers in 2018 was 7.9 billion, + 47% for the whole year, which is expected to be the highest growth rate of listed insurance companies. The essence is: (1) Reserves are significantly reduced.

Under the background of the 750-day moving average, the company increased its reserve by 5 billion against the current trend, compared with 8.3 billion in the same period last year, which was reduced by 3 billion to boost profit growth;Yields have fallen only 0.

Six single, profit and loss from changes in fair value-400 million, slightly higher than expected, but the restructuring is that the company’s fair value of financial assets sold and sold decreased, hiding some floating losses.

Looking forward to 2019, profit growth is expected to maintain a high growth rate.

First, the capital market is clearly picking up, and it is expected to change the trend of asset end. Second, long-term protection products will continue to grow. It is expected that the remaining marginal balance and amortization will also increase significantly. Finally, the reserve will increase by 5 billion against the market in 2018.The 750-day curve (20-year period) varies under the three assumptions of -4 BP, 1 BP, and 7BP, contributing to the elasticity of performance as high as 29%, 52%, and 79% to accumulate strength.

Therefore, we believe that the superposition of the three will help maintain the rapid growth of profits.

We will resolutely transform and develop, with steady growth in value.

(1) NBV changes from negative to positive, and the increase in value rate is the main reason.

NBV 12.2 billion, +1 in ten years.

2%, the interim report growth rate is -9%, the core driving force from negative to positive is the increase in value rate.

The company adheres to the health insurance strategy, and the proportion of high-value products in the first year’s premiums increased to 58.

7%, pushing the NBV margin by 39.

7% increased to 47.

9%, contributed 21% increase in NBV, overlapping the decline in new orders.

The reason for the year-on-year improvement in the value rate is that it is lower than the 55 reported.

5% further increase.

Looking ahead to 2019, the workforce will be consolidated, and the starter will focus on the transformation of health insurance product strategies. At the same time, resonance will help further improve new orders and value rate. Therefore, we expect to gradually achieve a 10% growth rate.

At the same time, the sales of high-value-rate products in the first quarter had obvious effects, and the value growth in the first quarter was expected to exceed expectations.

(2) The growth of embedded value is slightly lower than expected, and investment bias is the main drag.

EV 183.2 billion, exceeding + 13%, slightly exceeding market expectations, and ultimately lies in the negative contribution of investment deviation.

Expected returns and new business value contribute 9 respectively.

2%, 8%; operating deviation contribution of 2%, the performance of the branch’s independent business model is significant.

However, the investment deviation was -5.9 billion, dragging down the EV growth rate by 4%, and the decline in the capital market led to a reduction in the comprehensive investment yield.

However, changes in operating assumptions and economic assumptions have dragged down1.

6%, a more conservative assumption is that the company’s built-in value accumulates strength.

Looking ahead to 2019, EVs are expected to grow by 17%.

The expected return remains stable (+ 9%), and the rebound in the growth of the value of new business is still significant (expected + 8%), while investment deviation is conducive to the improvement of the capital market recovery (estimated + 0%), while operating deviationAssuming that dividends remain stable, + 1% and -1%, respectively, conservatively estimate that EV growth in 2019 will be 17%.

Resistance: Adhering to the long-term protection products and healthy manpower strategy, the transformation results are significant.

Product structure, health insurance long-term insurance premiums accounted for 58 in the first year.

7%, an increase of at least 26 averages, and an increase of 3 indicators over the interim report. The high proportion of health insurance has promoted a significant increase in the value ratio.

The quality of the agent team has increased to 370,000, with an annual increase of + 6%, which is expected to be a high growth rate for the industry, and the performance rate will still increase by 6 substitutes to 52.

8%. Thanks to the transformation and construction in the past three years, the stability of high-level agents provides a solid foundation for the subsequent team expansion. We expect the company’s agent size to expand in 2019.

Assets: In 2018, the net investment yield was 5%, a year-on-year decrease of 0.

1 average, while peace is 5.2%.

Total investment yield 4.

6%, a decline of 0 per year.

6 units.

The substantial adjustment of the capital market in 2018 resulted in an increase in equity assets, securities bid-ask spreads, changes in fair value gains and losses, and asset impairment losses of -900 million, -400 million, and -1.8 billion, respectively, all significantly worse than last year.

Taking into account the loss of possible 无锡夜网 changes in the sale of financial assets, and based on the negative investment bias in embedded value, we believe that the company’s comprehensive investment yield will be lower than the total investment yield.

The clear recovery of the equity market in 2019 is expected to reverse the downward trend in the asset side, and we maintain a better expectation of investment yield.

Investment advice: Maintain the company’s highly recommended rating.

The company’s 2018 annual report has many highlights: (1) rapid growth in profit growth; (2) continuous improvement of the debt structure to promote a significant increase in the value rate; (3) the stable growth of the team size and the gradual improvement in quality; (4) the growth of embedded value is slightly lowerDue to the expected but long-term and short-term factors, the growth of new business value basically met expectations.

Taking into account changes, the company’s business performance is not easy.

Looking ahead to 2019: (1) Consensus and clear strategic direction are the biggest catalyst for progressive upwards. If there are more than expected operating plans and changes, it will effectively support the company’s expected rapid improvement; (2) the improvement of the equity market boom can reverse the company’s investment(3) Growth in sales of long-term security products and agents is expected to increase rapidly in the first quarter; (4) Ultra-low estimates fully imply expectations.

At present, the company meets only zero PEV corresponding to the end of 2019.

81X, pessimistic anticipation of the expected full release. It is expected that the company’s EV will increase by 17% in 2019, and NBV will increase by 10%. The clarity of future problems and the improvement of core indicators will help the company to gradually improve.

The first target has an estimated value of 1X, corresponding to a target price of 68 yuan and a space of 30%.

Risk warning: Long-term health insurance sales fall short of expectations, and long-term interest rates fall