China Life (601628): Premium, manpower, value, high growth rate of investment gradually lead the industry without worry

China Life (601628): Premium, manpower, value, high growth rate of investment gradually lead the industry without worry

Key points of investment: China Life’s first three quarters of net profit quarter + 190%, net assets + 22% compared to the beginning of the year, new business value exceeds + 20%.

In the third quarter of the first quarter, the first-year exchange was +南宁桑拿 23%. The business structure was further optimized, and the proportion of guarantees increased. At the end of the third quarter, manpower was +15 earlier.


The growth of investment yield has increased significantly, thanks to the company’s continued accumulation of fixed income assets and the optimization of equity product structure.

The company is expected to lead NBV growth faster than its peers.

The estimate is still low, with a “previous market” rating.

Event: China Life announced the third quarter report of 2019: 1) Net profit in the first three quarters was 57.7 billion, above + 190%, of which Q3 net profit was US $ 20.1 billion, more than + 483%.

2) At the end of the third quarter, the net assets were 388.8 billion, + 22% from the beginning and + 6% from the beginning.

3) The first three quarters of NBV are +20 ahead of schedule.


The increase in net profit in the first three quarters was larger than initially, which was related to the low base in the same period last year.

In the third quarter of 2018, due to the slump in the equity market, the company made a significant accrual of asset impairment losses of 4.3 billion, resulting in a net profit of more than -76% in the third quarter of 2018.

Life insurance: In the third quarter of the first quarter, the first-year exchanges grew, and the growth of manpower was excellent.

1) In the first three quarters, the company’s first-year transaction in the life insurance business was +4.

7%, Q1, Q2, and Q3 were + 9%, -20%, and + 23%, respectively. The second quarter quarter was mainly affected by the high base price of the high current price dividend annuity during the same period in 2018, and the growth rate in the third quarter obviously rebounded.

The first-year delivery accounted for 98% of the new long-term insurance orders, which was +8 compared with the same period last year.

45ppt, of which 51% is ten years or more, + 16ppt compared with the same period last year.

2) The proportion of certain guarantee types in the first year is +8.


3) At the end of the third quarter, there were 1.95 million manpower, which was +180,000 over the end of the previous year.

One of the agents 166.

30,000, +15 from the beginning of the year.

6%, up from +5 earlier.


The average monthly effective human resources + 37%, and the actual average monthly increase in manpower for sales of certain guaranteed products + 49%.

We expect that the quality of the company’s team and the product structure will continue to improve, and the expansion of NBV is expected to achieve a growth rate of 15% -20%.

Investment: Steady progress is expected. It is expected that the return on investment is expected to lead the industry.

1) The company’s net investment yield in the first three quarters of 20194.

83%, ten years +0.

21ppt; total investment yield 5.

72%, ten years +2.

31ppt; comprehensive investment yield 6.

32%, ± 2.

At 73ppt, Fuying increased significantly from -5.6 billion at the end of 2018 to 14.7 billion.

2) The company’s investment assets at the end of the third quarter were 34,391 trillion, an increase of 10 from the end of 2018.


3) China Life has continuously deepened the marketization reform of the investment management system, strengthened asset and liability management, grasped the market rhythm, continued to accumulate long-term fixed income assets, and optimized the equity investment structure.

In the first three quarters of 2019, investment income from fixed income assets continued to grow, and investment income from equity assets in the open market increased.We expect the company’s asset duration to improve and extend; gradually it can still achieve an investment yield of 5% -6%, leading the industry.

The new leader’s plan to revitalize China Life has been initially implemented, and the company’s operating efficiency has been continuously improved.

Both 2019 profit and NBV growth are expected to be significantly higher than their peers.

At the end of September, the company launched the pre-sale product “Xinxiang Extreme” annuity insurance, which started earlier than its peers. Taking into account factors such as low global interest rates, domestic interest rate cuts and a decline in bank wealth management returns, the attractiveness of annuity insurance is expected to increase significantly.

Since the profit and EV in 2019 are affected by the increase and decrease in 2018, we give 1.


Double the PEV in 2020, corresponding to a reasonable expected range of 36.


10 yuan, the corresponding 2020E PEV included on October 29, 2019 is only 0.

85x, estimated to remain low, with a “Continuous Market” rating.

Risk warning: interest rates are trending downward; stock market fluctuates sharply; guaranteed growth is less than expected.