China Life 2628; ADR (LFC)

[winston]

Bull run or not a bull run, that is the question

China Life is the biggest earnings beneficiary of a continued A-share market rally, with FY20F net profit rising 9% for every 10% rise in the SHCOMP.

It is well placed to benefit from M2 growth rebounding 11.1% in Jun 2020 to a post Dec-2016 high, given its greater focus on savings-oriented policies.

These policies are also easier to sell relative to protection-oriented products in the current environment of limited face-to-face customer contact.

Reiterate Add rating. We expect its FY20F NBV growth to be highest of the insurers under our coverage. TP raised to HK$25 on higher EPS estimates.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... 3F88B8B664

[winston]

vested

Insurers are up and down

by Avery Chen and Stella Zhai

China Life Insurance (2628) said its first-half net profit fell 18.8 percent to 30.54 billion yuan (HK$34.36 billion).

Earnings per share of China Life were 1.07 yuan.

The company did not declare an interim dividend.

The decline in net profit was mainly affected by the update of discount rate assumptions for reserves of traditional insurance contracts, the adjustment of the pre-tax deduction policy of underwriting and policy acquisition costs adopted in the corresponding period of 2019 and the change in gross investment income, the insurer said.

Its total revenue rose 12.5 percent from a year ago to 504.43 billion yuan during the first six months with new business value growing 6.7 percent to 36.89 billion yuan.

The embedded value of the insurer, representing the sum of the present value of future profits and adjusted net asset value, exceeded 1 trillion yuan for the first time, up by 7.8 percent year-on-year to 1.02 trillion yuan as of the end of June.

Source: The Standard

https://www.thestandard.com.hk/section- ... p-and-down

[winston]

vested

Covid-induced margin pain

While 1H20 net profit was better than our forecast, NBV (+6.7% yoy) disappointed with weaker-than-forecast margins.

The weaker-than-forecast NBV margins were in part due to the difficulty in selling high-margin products during a period of limited face-to-face contact.

Reiterate Add. Our TP is raised 1% to HK$25.20 on higher EPS estimates.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... 676008AAE6

[winston]

vested

Brokers' Latest Views, TPs on CHINA LIFE (02628.HK) Post Results (Table)

Brokers│Ratings│TPs (HK$)
Credit Suisse│Outperform│30
Citigroup│Buy│27.5
Daiwa│ Buy │25
BofA Securities│ Buy │22.1->23.96
Morgan Stanley│Equalweight│18

--------------------

Brokers│Views

Credit Suisse│Leads peers in NBV growth
Citigroup│1H20 results in-line; NBV grows despite coronavirus pandemic
Daiwa│ NBV growth slightly misses; margin growth resilient
BofA Securities│ Leads peers in NBV growth; product portfolio stable
Morgan Stanley│NBV growth beats


Source: AAStocks Financial News

[winston]

China Life Insurance-H (2628 HK / 601628 CH) - Decent VNB growth

With rising protection and wealth management needs of China’s rising middle class, China Life is one of the key beneficiaries of this medium term growth trend as a leading domestic life insurer with ~15-20% estimated market share.

The regulatory shift towards more long-term and protection product mix is positive for future margins but transition to the new business model and transformation process led by new management may be bumpy amidst the current challenging operating environment hampered by concerns from lower interest rates, weak equity markets and the Covid-19 outbreak.

Dividend payout as of end FY19 was 35%.

Potential catalysts may include introduction of more market oriented performance targets (i.e. on VNB, agent growth and net profits). BUY (2628 HK) / SELL (601628 CH).

Source: OCBC

[winston]

vested

China Life profit drops to 47b yuan for three quarters

China Life Insurance (2628) said its net profit for the first three quarters fell 18.4 percent to 47.08 billion yuan (HK$54.36 billion).

The decline is mainly due to the update of discount rate assumptions for reserves of traditional insurance contracts, the adjustment of the pre-tax deduction policy, and the change in gross investment income, the insurer said.

In the first nine months, China Life's operating income increased by 10.8 percent to 691.57 billion yuan.

The new business value grew by 2.7 percent year-on-year.

The third-quarter net profit dropped by 17.7 percent to 16.54 billion yuan.

Source: The Standard

https://www.thestandard.com.hk/section- ... e-quarters

[winston]

When life takes a dive

9M20 life NBV growth of 2.7% yoy was disappointing (1H20: 6.7% yoy; 1Q20: 8.3% yoy), due to a 25% yoy fall in 3Q20 first year regular premiums.

3Q20 life agents fell 2% qoq to 1.66m (2Q20: -4% qoq).

9M20 net profit was the main metric that was better than we expected.

Maintain Add rating, but cut TP by 5% to HK$23.90, due to lower NBV forecasts over FY20F–FY22F.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... AD80F96B94

[winston]

vested

Brokers' Latest Ratings, TPs, Views on CHINA LIFE (02628.HK) (Table)

Brokers│Investment Ratings│TPs (HK$)

JPMorgan│Overweight│45
Credit Suisse│Outperform│30
Citigroup│Buy│27.5
Macquarie│Outperform│25
Nomura│Buy│23.95->23.52
Goldman Sachs│Buy│23.5
HSBC Global Research│Hold│19.5->20.2
UBS│Neutral│19.5
Morgan Stanley│Equalweight│18

M Stanley: CN Insurers 3Q VNB May Fall 5-25% with Weak Sales

——————————————————————

Brokers│Views

JPMorgan│Product margin risks lowered
Credit Suisse│1Q-3Q VoNB in-line; eyes new product pre-sales
Citigroup│QoQ results broadly in-line; net profit beats
Macquarie│Results improvement on track
Nomura│Net profit beats; net asset, VoNB miss
Goldman Sachs│Sales manpower stabilizing; 2021 outlook improves
HSBC Global Research│VoNB growth slows; business portfolio pressured
UBS│3Q VoNB sales weakens
Morgan Stanley│Growth momentum slackens

Nomura Chops CHINA LIFE (02628.HK) TP to $23.52; Rated Buy

Source: AAStocks Financial News

[winston]

vested

China Life Insurance (2628 HK / 601628 CH) - Focusing on jumpstart pre-sales

With rising protection and wealth management needs of China’s rising middle class, China Life is one of the key beneficiaries of this medium term growth trend as a leading domestic life insurer with ~15-20% estimated market share.

The regulatory shift towards more long-term and protection product mix is positive for future margins but transition to the new business model and transformation process led by new management may be bumpy amidst the current challenging operating environment hampered by concerns from lower interest rates, weak equity markets and the Covid-19 outbreak.

Dividend payout as of end FY19 was 35%.

Potential catalysts may include introduction of more market oriented performance targets (i.e. on VNB, agent growth and net profits).

BUY(2628 HK)/SELL (601628 CH).

Source: OCBC

[winston]

not vested

High-value insurance will decline, China Life predicts

Large-value insurance policies are expected to significantly drop in the first quarter of next year, the president of China Life (2628) Su Hengxuan said.

Businesses of small and micro enterprises have been hit hard by the new coronavirus, and uncertainties will increase.

Su said China's long-term economic improvement will remain unchanged and the insurance industry, especially the life insurance sector, will continue to improve.

He believes that the epidemic in the mainland has increased insurance awareness.

Source: The Standard

https://www.thestandard.com.hk/breaking ... e-predicts