Ping An of China (601318): There are always bright spots and stable performance: NBVM high growth
New orders have stabilized, investment has picked up, tax cuts have helped, and value and profits have grown on schedule.
1) The growth rate of NBV exceeded the new order, and the deviation from investment and operation helped the EV to increase rapidly: 19H1 Group EV was 1.
1 trillion, + 11% from the end of the previous year.
Among them, life insurance EV was 713.2 billion, + 16% compared with the end of the previous year, and ROEV was 14% (YoY-3.
4pct), the investment negative bias reverses the positive overlap NBV and the operational positive bias contribution-NBVM increased to 44.
7% (+5 compared to the same period last year).
7pct) projected that NBV increased to 41.1 billion (with an actuarial fake design at the end of 18 years, YoY + 5%), an operating deviation of 158 trillion, and an investment return deviation of 88 trillion, respectively, at the beginning of the life insurance EV ratio of 6.
2) Tax reduction policy + increase in investment income + release of reserves to jointly increase profits: 19H1 Group’s operating profit attributable to mothers is 73.5 billion (YoY + 24%), and net profit attributable to mothers is 97.7 billion (YoY + 68%).
① The income balance of 18 years alone contributed 86 trillion in life insurance profits and 19 trillion in property insurance profits. After replacement, the net profit of the mother’s company in 19H1 was 87.2 billion yuan (YoY + 50%).
② In the first half of the year, the bond market was stable and the stock market was improving. The comprehensive investment income was 1,018 trillion (YoY + 86%), and the comprehensive yield increased to 7.
1% (+ 3pct year-on-year).
③ As of the end of June, the 750-day moving average government bond yield was 3.
408%, +5 from the end of the previous year.
3bps, the release of 19H1 reserve brings a profit increase of 2.1 billion.
The current 10-year Treasury bond yields have fallen by 3%, and there is a possibility of further dip.
It is estimated that even from July 1st, it will replace 3%, and the 750-day moving average is still over 3.
41%, it is expected that reserves will continue to be released, increasing profits.
③ Fintech’s 19H1 return to its parent’s operating profit was 2.8 billion (YoY-33%), which was mainly due to the company’s increased investment in technology business.
3) Continue to maintain high dividends, arbitrarily subdivide 0.
75 yuan (YoY + 21%).
Dividends are based on operating profit. Operating profit can reflect the EV situation and is not affected by changes in short-term investments. Therefore, operating profit drives the stability of dividend growth.
Life insurance: In the first half of the year, the decline in new orders narrowed, business structure was optimized, and NBVM was improved to help NBV increase steadily.
In 19H1, the total new orders were 101.3 billion yuan (YoY-5%), and the new orders for personal business were 87.8 billion yuan (YoY-7%).
In terms of quarters, Q1 and Q2 used to calculate NBV’s first year premiums were 58.8 billion (YoY-11%) and 33.1 billion (YoY-4%).
1) Positive growth in bancassurance delivery: In the personal business, new insurance policies are next to -12%. New bancassurance settlements are down while the futures delivery is up 42%, with an overall growth of + 30%.
2) Product structure optimization and NBVM improvement.
Hedging new orders decreased slightly to help NBV growth: ① In terms of total premiums, traditional life insurance and long-term health insurance premiums were 60.4 billion (YoY + 19%) and 54.7 billion (YoY + 22%), accounting for 16% (+ 2pct).), 15% (+ 2pct).
② In terms of the first-year premium, the new insurance premiums for individual insurance were -15% year-on-year for the calculation of NBV’s first-year premiums. However, the long-term insurance coverage for individual insurance increased slightly.7 pct); At the same time, NBVM reached 97% (+ 2 pct), 64% (+ 20 pct), 25% (+ 8 pct), driving the growth of personal insurance NBV by 3% to 36.2 billion US dollars.
At the same time, the bancassurance period of new orders increased significantly, helping NBVM to rise to 19% (+ 4pct), and to promote bancassurance NBV at least + 77% to 700 million.
The improvement of product structure and term structure of NBVM has significantly boosted NBV. It is expected that NBV will continue to grow in 2019.
3) 1.29 million agents in 19H1 (YoY-8%), and the estimated per capita capacity was 9,293 yuan (YoY-2%), which was significantly higher than the industry level.
The number of agents may pick up in the second half of the year. With various product strategies, new orders are expected to be further repaired.
Property insurance: Car insurance has increased steadily, ensuring that insurance pressure is reduced, and tax reduction + fee reductions have helped improve profits.
1) The overall situation: 19H1 property insurance premiums were 130.5 billion (YoY + 10%), and net profit was 11.9 billion US dollars (YoY + 101%). Excluding the impact of the previous year’s earnings balance, net profit reached 10 billion (YoY + 70%), mainlySince ① 19H1 fee expenditure is 19 billion yuan (YoY-26%), accounting for less than 15% of the original premium, no tax is required.
② Investment income increased by 62% year-on-year.However, the underwriting profit was 3.8 billion (YoY-70%), and the results of the “unification of newspapers and banks” were outstanding.
An 8 point leads to a combined cost rate of 96.
6% (+0 year-on-year.
2) Auto insurance: premiums in 19H1 were 92.3 billion (YoY + 9%), with a faster growth rate than the industry, with a market share of 23.
3% (YoY + 1pct); the overall cost rate is 97.
7% (+0 year-on-year.
5 pct), to achieve an underwriting profit of 2 billion yuan (YoY-8%).
Mainly due to the payout rate being +1 per year.
Under strict supervision, the expense rate is expected to decline steadily, and the payout rate 杭州桑拿网 may increase due to the increase in small cases. However, in the long run, both scale and profits will increase. Focusing on leading insurance companies with fixed losses and channel advantages.
3) Non-auto insurance: 19H1 insurance premiums were 38.1 billion (YoY + 12%), and the decline in growth rate was mainly due to the guarantee of cumulative insurance coverage of -6% to 15.3 billion.
Guaranteed insurance 19H1 comprehensive cost rate of 93.
2% (+ 6pct year-on-year), can still achieve an underwriting profit of 800 million yuan (20% year-on-year), a slight change in business quality, the company’s timely reduction in scale (or stop some high-risk businesses), will help continue to achieve underwriting profits.
The deterministic margin of the investment side has improved, and there is no possibility of spreads in extreme cases: under IAS39, the total investment return rate in 19H1 is 4.
5% (annual flat) and a net investment return of 4.
5% (+0 year-on-year.
3pct), and calculate the comprehensive investment return rate 7.
1% (+ 3pct year-on-year).
Taking into account that the long-term interest rate may fluctuate downward (or less than 3%), and the equity market will remain volatile under increasing external uncertainty, we assume that listed insurance companies have 20% of non-standard assets and bonds due in 2018.At the same time, it is assumed that the new bond yield is 2.
8%, non-standard rate of return 7.
1%, stock + equity-based yield of 5%, then Ping An’s total investment yield in 2019 is more than 5%, which is higher than the cost of existing debt funds and can still make a difference.
Bank performance bloomed, trust and securities business resumed: 1) Ping An Bank’s 19H1 revenue was 67.8 billion (YoY + 18%), and net profit attributable to its mother was 15.4 billion (YoY + 15%).
Refined and strengthened the business to the public, and helped increase the deposit by +13.
9%, of which 63% was newly added to corporate deposits, an increase of nearly 57 pct compared with the end of the previous year. The focus was on breakthroughs in mid- to high-end customers, and the scale of retail asset management increased by + 44% (QoQ + 4 pct).
Work together on corporate and retail businesses to promote annualized net interest margins2.
62% (QoQ + 9bps), significantly broadening; Optimizing the quality of public debt, helping the NPL ratio to -5bps to 1.
2) Trust and securities litigation procedure fees and commission income were 2 billion (YoY-4%) and 2.7 billion US dollars (YoY + 30%). The recovery of the main business market has improved the impact of the improvement and repair of Lufax’s limited ecosystem.Long-term empowerment does not change: Lu Jinfu is actively responding to the regulatory “three-down” requirements, and will gradually withdraw from the P2P business, or will be restructured into a network of small loans and consumer finance companies encouraged by regulation.
1) From the perspective of profit, as of June 2019, the balance of P2P business expenditures was 98.4 billion, a conservative estimate of R / AUM 4%?
5%; current non-performing rate 2.
15%, after eliminating the bad, the net profit of the P2P business in the first half of the year is about 39?
4.8 billion, Ping An holding 41% of shares, 19H1 will contribute to the group’s net profit of 16?
2 billion, affecting less than 2% of net profit.
2) From the perspective of net assets and EV, Ping An holds 41% of the equity held by Lujin, which is a long-term equity investment accounted for using the equity method. Its 19H1 net balance at the end of 19H1 was US $ 25.6 billion, which actually contributed to the group’s net assets of US $ 10.5 billion.
As of 19H1, the Group’s net assets were 7640 ppm and its EV exceeded 1.
1 trillion yuan, and Lu Jinfu’s net assets at the end of 2018 were only about 100 million yuan, with minimal impact on net assets and EV.
3) From the perspective of the layout of the ecosphere, Lufax is only a component of financial services in the five major ecospheres of Ping An Finance, Medical, Automotive, Property and Smart Cities.
19H Lufax had a loan surplus of 98.4 billion yuan, accounting for only 24% of Lufax’s 407.8 billion AUM.
The stock business is not affected this time, the actual profit and EV impact should be under calculation.
Investment suggestion: The asset-liability matching is good, which promotes the stability of the center.
In the second half of the year, the pressure on new orders was eased, and the increase in staff and product diversification helped increase the quality. NBV is expected to grow.
The recovery of new orders + the improvement of cars will lead the improvement + improvement of the investment side, which is expected to promote the expected repair.
External uncertainties have increased. As a stock with high dividends and stable growth, it can realize the value storage target, which has great configuration value.
The company’s EV growth rate is expected to be 15% + in 2019-2021, corresponding to 1.
5 times PEV.
At present, the overall corresponding PEV for 2019-2021 is 1 respectively.
0 times, lower than the desired interval, maintaining a highly recommended level.
Risk warning: long-term interest rate growth rate, equity market growth rate, investment income increase rate; premium growth is below expectations.