<Result first take>: China Life (2628 HK, HOLD) 1Q22 results missed with VNB down 14% y-o-y
What’s new:
- China Life (2628 HK, HOLD) announced 1Q22 result which posted net profits attributable to shareholders of Rmb15bn, down 47% y-o-y, representing 26% of ours FY22F earnings estimate. Value of new business (VNB) dropped 14% y-o-y which is better than expected.
Our views:
- The net profits performance missed with our earnings estimate, given 1Q usually contributes over half of the full-year net profits. The net profits down was primarily due to the decrease in investment income and the consistently sluggish demands to the insurance products.
- Business development remains under pressure, first-year regular premium up down 4% y-o-y to Rmb65bn, with value of new business (VNB) down 14% y-o-y in 1Q22, due to the demands for insurance consumption were hardly released in full, and the development of the Company’s new-policy business was still under pressure amid COVID-19 pandemic, but overall VNB performance is better than expected.
- Investment income down 27% to Rmb54bn with gross/ net investment yield of 3.9%/4.0% in 1Q22. The underperforming investment result was due to the volatility in equity market and the 1Q21 high base
- The company started to implement the C-ROSS II Phase 2 regulation with core and comprehensive solvency ratios at 176% and 248%, respectively. Overall solvency level still largely higher than the regulation threshold
- China Life’s board also appoints Bai Tao as the insurer new Chairman, the official approval is still pending from CBIRC.
- Maintain HOLD with TP of HK$13, implying 0.2x FY21F price/enterprise value (P/EV)