Model adjustment
- We adjust our models to reflect 2023’s movements in the equity and bonds markets, as well as recent premium growth trends.
- Our FY23F EPS is cut by 27%, while our FY24F and FY25F EPS are cut by 23% and 24% respectively.
- Our forecasts are based on the new accounting standards of IFRS 17 and 9. Our new weighted P/EV & P/BV GGM-based TP is cut to HK$12.40.
Incorporating 2023’s investment markets and premium trends
We adjust our models to reflect 2023’s movements in the equity and bonds markets, as well as recent premium growth trends. As a result, our FY23F EPS is cut by 27%, while our FY24F and FY25F EPS are cut by 23% and 24% respectively (Fig 1). These EPS forecasts are based on the new accounting standards of International Financial Reporting Standards (IFRS) 17 and 9. For 4Q23F, we expect a net loss of Rmb3.3bn versus 3Q23’s Rmb0.6bn. Our FY23F, FY24F and FY25F new business growth forecasts are 12.5%, 10.1% and 11.2% respectively.
Maintain Add rating; TP cut to HK$12.40
Our weighted P/EV & P/BV GGM-based TP is cut to HK$12.40, from HK$15.60, in part due to lower FY23F – 25F EPS estimates and in part due to a higher cost of equity assumption to reflect a more uncertain macroeconomic outlook (Fig 2). We reiterate our Add rating on attractive P/EV valuations as it trades more than 1 s.d. below its post-2010 P/EV mean, as well as our view of a strong 2024 jump-start sales campaign. Potential rerating catalysts: stronger NBV growth and better investment income should investment markets stabilise. Downside risks are falling agent numbers, lower bond yields, investment
asset risk and greater regulatory risk.
