China Life 2628; ADR (LFC)

[winston]

not vested

China Life Insurance
FY20F: A story of two contrasting halves

We see China Life’s FY20F as a story of two halves: a strong 1H20 and a much weaker 2H20F for new business value performance.

This 2H20F slowdown is evident from both the 3Q20 results and monthly premium disclosures, with 3Q20 and 4Q20 premiums both down 3% yoy.

But 2H20F operational weakness may already be priced in. Its share price performance was the weakest of listed peers over the last six months.

Reiterate Add rating. TP raised 1% to HK$24.20 as we roll forward our valuations and use a higher Rmb/HK$ exchange rate assumption.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... 1CF0043C5D

[winston]

not vested

A tough time to be an agent

China Life’s 13% qoq fall in agent numbers in 4Q20 was eye-catching and is
the worst qoq fall since at least 3Q18.

FY20 net profit and DPS missed our estimates by 8-10% (pre-tax profit
missed by 17%), while NBV and EV slightly beat by 2%.

Reiterate Add. TP cut by 5% to HK$23.10 on lower EPS estimates.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... 61B1547F48

[winston]

not vested

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

Brokers│Ratings│TPs (HK$)
JPMorgan│Overweight│38
Citigroup│Buy│27
BofA Securities│Buy│23.96
Goldman Sachs│Buy│23.5
Nomura│Buy│23.41
Credit Suisse│Outperform│25->23
BOCI│Buy│23.3->22.8
UBS│Buy│20.9->20
CICC│Outperform│20
BOCOMI│Buy->Neutral│23->19

Brokers│Views
JPMorgan│focuses on value growth; investment return expectable
Citigroup│2020 NP, NBV growth in-line
BofA Securities│fee growth sustainable in 2021; lifts 2021-22E earnings by 11-21% on better investment gain
Goldman Sachs│2020 ROI higher but investment gain below forecast; underlying profit growth may stay strong
Nomura│ROI high; 2020 NP, net asset rise slightly above forecast
Credit Suisse│2020 DPS below forecast; 2021 as transition yr
BOCI│2020 NP, NBV growth below forecast
UBS│NBV growth in-line but agent channels reduce
CICC│2020 NBV meets consensus

Source: AAStocks Financial News

[winston]

not vested

China Life says domestic rebound will lift equity market

Mainland China's macroeconomic rebound and a more standardized capital market will help improve the equity market in the long run, China Life Insurance Company (2628), said.

China's 10-year treasury yield once touched a record low at 2.48 percent in April followed by an economic rebound, said Zhang Di, general manager of the investment management department.

The group seized the chance to allocate assets to improve the balance sheet, Zhang said.

As for credit default risks, Zhang said the group will steadily advance bond investment under the premise of controllable risks as there were a series of defaults last year.

Separately, president, Su Hengxuan, said an investigation on premium fraud and audition violations is in the final stage.

A former employee of China Life had reported that a Heilongjiang branch superviser was involved in premium fraud while some employees of the auditor Deloitte's Beijing branch reported violations of the group's auditing.

Source: The Standard

https://www.thestandard.com.hk/breaking ... ity-market

[winston]

not vested

Two important metrics on diverging paths

1Q21’s net profit guidance was a surprise. We think its strong investment income was driven by crystalising gains on ‘leaders’ in its equity portfolio.

1Q21 net profit equates to 48-54% of FY21F Bloomberg consensus. Nevertheless, our main concerns are still 1Q21F and FY21F NBV weakness.

We think subdued NBV growth is a more important driver of H-share prices, with its share price performance the worst of peers over the past six months.

Reiterate Add rating on attractive valuations. TP raised to HK$24.50 as\higher EPS estimates more than offset cuts to our NBV estimates.

Source: UOBKH

https://rfs.cgs-cimb.com/api/download?f ... 331FD7011B

[winston]

not vested

China Life net climbs to 28.5b yuan, new business falls

China Life Insurance (2628) said first-quarter net profit increased by 67.3 percent to 28.59 billion yuan (HK$34.23 billion) from a year ago.

However, the new business value dropped by 13.2 percent year on year.

The basic earnings per share were 1.01 yuan.

Revenues from the insurance business grew by 5.2 percent to 323.89 billion yuan.

The net investment income was 41.4 billion yuan, an increase of 8.7 percent year on year, with a net investment yield of 4.08 percent.

Source: The Standard

https://www.thestandard.com.hk/breaking ... ness-falls

[winston]

Still under pressure

1Q21 NBV’s 13.2% yoy fall leads us to cut our FY21F NBV growth forecast. We now forecast -17%/-7%/-7% for 2Q/3Q/4Q21F, with FY21F at -11.7% yoy.

Agent numbers continued falling by -7% qoq and -27% yoy. This rate of fall is surprisingly worse than major peer, Ping An’s, yoy fall in recent years.

This is despite China Life not undergoing a major agent reform programme, unlike Ping An which had seen a 31% fall of agents from peak to trough.

Maintain Add rating on cheap valuations. TP cut 3% to HK$23.80.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... B44FC51EAA

[winston]

not vested

China Life Insurance (2628 HK / 601628 CH) - 1Q results in line with guidance

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 volatile equity markets and impact on face to face sales recovery following the Covid-19 outbreak.

Dividend payout as of end FY20 was 36%.

While we see long term value, we believe investors will need to be patient given a continued gradual recovery outlook for the sector as offline business takes time to normalize amid intensifying competition, while the stabilization of China’s bond yield and better A-share equity market on the back of an improving macro backdrop should be supportive of investment income generation. BUY (2628 HK) / SELL (601628 CH).

Source: OCBC

[winston]

not vested

China Life scores but new deals fall

China Life Insurance (2628) recorded 34 percent growth in interim net profit to 41 billion yuan (HK$49.3 billion), but its new business value dropped 19 percent to 29.9 billion yuan from a year ago.

No interim dividend was proposed.

Gross written premiums rose 3.5 percent to 442 billion yuan. But premiums from new policies fell 8.4 percent to 133.9 billion yuan, which was attributed to the impact of the pandemic and a slowdown in the release of demand.

Its gross investment yield rose 35 basis points to 5.69 percent, and a gross investment income of 117.6 billion yuan was recorded.

A 22 percent growth in the investment segment steered the net profit up, the company said.

Its total assets grew 9.4 percent to 4.65 trillion from the end of 2020.

The company's total sales force was about 1.22 million, which was down 235,000 from the 1.458 million recorded at the end of 2020.

Source: The Standard

https://www.thestandard.com.hk/section- ... deals-fall

[winston]

not vested

China Life Insurance – Above expectations – Buy.

China Life reported 1H21 net profit of Rmb41bn, +34% yoy and 16% ahead of Visible Alpha consensus.

NBV declined 19% yoy to Rmb29.9bn, but recovered to 86%/106% of 1H19/1H18 level.

We highlight that agent headcount declined 17% ytd and 32% yoy to 1.15 million.

This implied agent productivity, measured in first-year regular premium per agent per month and NBV per agent per month, improved 13%/7% yoy.

We believe this suggests a managed process to reduce agent headcount and the agency channel reform is on track. 12m TP of HK$23/Rmb26 on H/A.

Source: GS