Xinhua Insurance (601336) Review in the Third Quarter: Both Scale and Value Expansion and Manpower Concern

Xinhua Insurance (601336) Review in the Third Quarter: Both Scale and Value Expansion and Manpower Concern

Xinhua Insurance’s operating income for the first three quarters of 2019 was 1,328 percent (YOY + 8%), and net profit attributable to the parent company was 130 percent (YOY + 69%).

We believe that the company’s 2019 third quarter report focuses on: (1) adjustment and adjustment of new orders under pressure, highlighting the importance of both value and scale.

The company’s new single-year annual growth in the first three quarters was 2%, an increase of 7% from the earlier interim report, of which the long-term insurance single-payment replacement rate was 5%.

In addition to the growth rate of new orders in the third quarterly report, in addition to the impact of intensified competition in the industry, the company’s merger adjustments and priority development of agent strategies also affected.

(2) The number of agents has surged, and it is worth looking forward to.

As of the third quarter report, the number of agents reached 460,000, an increase of 24% from the early and early stage, and maintained a counter-expansion expansion.

The company clarified the strategy of agents first, and will increase the assessment, which is expected to have a positive impact on the start of next year.

(3) The return on investment is lower than that of its peers, and tax cuts will boost profit growth.

The company’s total investment income injection in the first three quarters4.

7%, lower than its peers (China Life 5.

7% / Ping An 6% / CPIC 5.

1%), but benefited from the increase in the program fee deduction ratio, net profit increased by 69% in the first three quarters.

Optimize the premium structure and balance scale and value.

In the first three quarters of 2019, the company realized a premium income of 1079 trillion (YOY + 8%), which was affected by the company’s strategic adjustment, the industry competition intensified, and long-term insurance new single-term deposit replacement.

4%, but the optimization of the product structure has promoted the surrender rate by 4 over the same period.

5% up to 1.

4%.

New orders in the first three quarters achieved a growth rate of 2%, mainly driven by short-term insurance sales (YOY + 25%).

Renewed premiums reached 86.2 billion (YoY + 10%), and the proportion of renewed premiums remained at around 79%.

Benefiting from the company’s management since its inception, it has put forward the emphasis on both scale and value, focusing on the dual-wheel drive model of assets and liabilities. For the start of next year, the company will highlight both annuities and health insurance.Quotas pay annuity products.

The agent maintained a trend of expansion against the trend.

At the end of the three quarterly report, the number of agents reached 460,000, an increase of 24% from the early and early stages, and it is expected to eventually approach 500,000.

Since the third quarter, the company has clarified the strategy of unifying the development of manpower and manpower first, increasing agent incentives, and actively increasing staff through various means, which is expected to have a positive impact on the start of next year.

Investment income 4.

7%, provision for health insurance increased.

In the third quarter of 2019, the company’s investment assets reached 785 billion (YOY + 12%), investment income realized 26.4 billion (YoY 4%), the fair value change profit and loss distortion was positively reached 600 million yuan, and the investment return rate was realized4.

7%, lower than its peers (China Life 5.

7% / Ping An 6% / CPIC 5.

1%).

Affected by the 750-day moving average shift, the company reduced its life insurance liability reserve7.

8 ‰; Considering the increase in the actual incidence and the traditional perspective of actuarial considerations, the company increased the long-term health insurance reserve by 27 trillion and increased the pre-tax net profit by 2 billion yuan.

Investment suggestion: Buy-A investment rating. It is estimated that Xinhua Insurance’s net profit attributable to mothers in 2019-2021 will continue to increase by 23%, E15%, 22%, and EPS are 3 respectively.

11 yuan, 3.

58,4.

41 yuan.

Given a six-month target price 杭州桑拿网 of 60 yuan.

Risk reminders: premium income further expands risks, regulatory policy uncertainty, and the extent of changes in the secondary market.