Ping An of China (601318): Two-wheel drive of value and investment

The increase in value and the improvement in the margin of the investment end helped the mother’s net profit increase by 77%.

1) NBV achieves positive growth against new orders: 2019Q1 is the calculation of NBV’s first-year premiums of 58.8 billion (YoY-11%), NBV is 21.6 billion, 18Q1 actuarial design, + 9% per year;Designed + 6% annually.

2) The decrease in commission rate directly leads to the decrease in income tax rate.

19Q1 program fee expenditure of 32.8 billion (YoY-11%), accounting for 12% of premium income (YoY-3pct); business and management costs of $ 40.8 billion (YoY + 33%), accounting for 15% (YoY + 3pct)), The overall expense rate is stable, but the fee rate has decreased, reducing the income tax rate by -5pct to 22%.

3) The recovery of the stock market promotes the realization of the total investment yield (original index) 3.

8%, the increase in profit of associates and bond yields promoted a net investment yield of +0 each time.

2 points to 3.

9%.

The company’s total investment yield is slightly lower than its peers, mainly because the company has not annualized the dividend income, changes in fair value gains and losses, etc., and the total investment yield has been underestimated.

4) The 750-day moving average moves online, and new orders are negatively increased, but reserves are more accrued. The probability is more cautious due to actuarial assumptions: 19Q1 life insurance new orders are negatively increased by 10%, but the extracted insurance liability reserve is at least + 24%.47% of premium income (YoY + 6pct).

By calculation, as of the end of 19Q1, the 750-day movement of the ten-year Treasury bond maturity yield was relatively 3.

38%, 18bps earlier in the first quarter, we can assume that the company’s actuarial assumptions or adjustments are more cautious.

Life insurance: business structure is optimized, NBVM is improved, new single-negative growth is hedged, and NBV is promoted to grow steadily.

1) The decline in new orders narrows month by month, and 19H1 is expected to achieve positive growth: total premiums in 19Q1 are 238.2 billion (YoY-3%). According to monthly premium income data, total new orders in Q1 are $ 59.9 billion (YoY-10%). Personal businessThe new orders were 5.31 million yuan (YoY-13%), and the decline in new orders per month has achieved positive growth for 3 consecutive months.

2) The optimization of business structure has helped NBVM improve, and NBV has achieved steady growth: the company’s “starting-up” period is to ensure products and pricing interest rates3.

5% annuity insurance mainly, compared with previous years, the business structure is better, NBVM is as high as 36.

8%, +5 per year.

9pct, boosting NBV by at least + 6% to 216 trillion.

It is expected that NBVM will maintain a high level, new orders will be restored, NBVM will remain high, and NBV will achieve deterministic growth. 3) The number of agents will be 1.31 million, which will decrease.

However, the company will adhere to the level of staff increase and agent evaluation requirements. In the future, it will continue to use technology to improve agent training and management, improve the quality of agents, and form a competitive advantage.

Property insurance: The premiums increased steadily, and the underwriting profit continued to be realized. The yield rate decreased with the commission rate, driving a high increase in net profit.

1) 19Q1 property insurance premiums were 69.2 billion (YoY + 18%), and the comprehensive cost ratio was 97% (YoY + 1).

1pct).

Among them, auto insurance premiums were 47.8 billion (YoY + 8%), a growth rate exceeding that of the industry; non-auto insurance was 21.4 billion (YoY + 12%). The decline in growth rate was mainly to ensure the insurance growth rate.

2) 19Q1 property insurance net profit of 5.8 billion (YoY + 77%), yield 23% (YoY-19pct).

According to the company’s public performance 无锡夜网 conference, ① the decline in yield is mainly due to the decrease in the program fee rate; ② the compensation rate has remained basically stable; ③ the business and management fee rate has risen, the hedging disposal fee and commission rate have fallen, and the overall expense rate is relatively stable, but the operationThe decrease in the fee rate leads to a decrease in the deferred expenses of the current period, and in the short term it will lead to a certain increase in the comprehensive cost rate.

3) The continuous improvement of commercial vehicle fare reform and the integration of newspapers and banks. Leading insurers will take advantage of channels, pricing and fixed loss advantages to take the lead in encircling and continue to achieve excess underwriting profit.

After calculation, the comprehensive 南宁桑拿 investment income increased by 6 after the annualized treatment.

8%, which is comparable to the industry peers: under the neutral assumption, the bond yield is 4.

5%, non-standard rate of return 7.

1%, we assume long-term stock + equity fund yield of 5%, the total investment return of Ping An 2019 will reach 5.

4%.

Better banking business, improved trust and securities earnings: Ping An Bank’s 2019Q1 net profit was 7.4 billion yuan (YoY + 13%), with a net interest margin of 2.

53% (+0 year-on-year.

3pct), the bad rate is -2bps to 1.

75%, business quality is improving.

The net profit of trust and securities was + 16% and + 32% each year, respectively, and the profit improved significantly.

The repurchase of shares for the first time demonstrates confidence and improves the long-term incentive mechanism.The company plans to repurchase the company’s A shares with its own funds of US $ 5-10 billion from April 29, 2019 to April 28, 2020, with the repurchase price not exceeding 101.

24 yuan / share, it is expected to repurchase 98.78 million shares (accounting for 0.

54%).

All will be used as the company’s employee stock ownership plan, including but not limited to the company’s long-term service plan.

Investment suggestion: Optimize business structure, NBVM will inevitably improve, and NBV will achieve deterministic growth; commercial vehicle fee reform + reporting and banking integration, which will benefit channels, leading pricing companies with stronger pricing and risk control capabilities.

The company’s EV growth rate is expected to be more than 15% in 2019-2021, corresponding to 1.

5 times PEV.

At present, the overall corresponding PEV for 2019-2021 is 1.

3, 1.

1.

0 times, maintaining a highly recommended level.

Risk warning: interest rates continue to fall, market volatility, investment income growth; premium growth is less than expected.