<Result first take> China Life (2628 HK, HOLD) FY21 results missed with VNB down 23% y-o-y
What’s new:
- China Life (2628 HK, HOLD) announced FY21 result which posted net profits of Rmb51bn, up 1% y-o-y, representing 85%/89% of ours and consensus FY21F earnings estimate. VNB in FY21 down 23% y-o-y and miss our forecast.
Our views:
- Business development under pressure from higher base and sluggish demand. First-year regular premium declined 9% y-o-y to Rmb176bn, VNB down 23% y-o-y and miss our forecast.
- Long-term policy proportion deteriorating, as evidence that the % of first-year regular premiums from durations over 10yrs shrunk from 49% in FY20 to 42% in FY21.
- Sales force has seen a 39% y-o-y drop in FY21 to 890k, which considers to be the key reason of premium decline.
- The overall miss of FY21 results is also due to deteriorating investment performance in 2H21, Gross investment income down 5% in 2H21, gross/ net investment yield remain stable at 5.0%/4.4%.
- Maintain HOLD with TP of HKD14.25, where we apply 0.3x FY22F price/embedded value (P/EV).