20230328-招银国际-中国太保-02601.HK-Expect_sustainable_DPS_growth_onwards_5页_924kb

CPIC (2601 HK) Summary

Core Content

CPIC (China Pacific Insurance) reported positive financial performance in FY22 and 2H22, with a focus on sustainable growth in dividends per share (DPS) and value of new business (VNB). The company is currently rated BUY with a target price of HK$29.72.

Key Financial Highlights

Earnings Summary (YE 31 Dec)

• Net profit (RMB mn):
  • FY21A: 27,618
  • FY22A: 25,240
  • FY23E: 29,871
  • FY24E: 34,389
  • FY25E: 37,633
• EPS (Reported):
  • FY21A: 2.79
  • FY22A: 2.56
  • FY23E: 3.03
  • FY24E: 3.49
  • FY25E: 3.81
• YoY growth (%):
  • FY21A: 6.0
  • FY22A: -8.2
  • FY23E: 18.3
  • FY24E: 15.1
  • FY25E: 9.4
• Group embedded value/share (RMB):
  • FY21A: 51.80
  • FY22A: 54.01
  • FY23E: 59.23
  • FY24E: 65.73
  • FY25E: 72.75
• Combined ratio (%):
  • FY21A: 99.0
  • FY22A: 97.3
  • FY23E: 97.3
  • FY24E: 97.3
  • FY25E: 97.3
• P/B (x):
  • FY21A: 0.8
  • FY22A: 0.7
  • FY23E: 0.7
  • FY24E: 0.7
  • FY25E: 0.6
• P/Embedded value (x):
  • FY21A: 0.3
  • FY22A: 0.3
  • FY23E: 0.3
  • FY24E: 0.3
  • FY25E: 0.2
• Dividend yield (%):
  • FY21A: 5.6
  • FY22A: 5.8
  • FY23E: 6.8
  • FY24E: 7.8
  • FY25E: 8.6
• ROE (%):
  • FY21A: 12.1
  • FY22A: 10.8
  • FY23E: 12.5
  • FY24E: 13.3
  • FY25E: 13.2

Dividend Payout

• Dividend payout ratio (%):
  • FY20: 49.4
  • FY21: 35.8
  • FY22: 39.8
  • FY23: 39.9
  • FY24: 39.9
  • FY25: 39.9
• DPS (RMB per share):
  • FY20: 1.30
  • FY21: 1.00
  • FY22: 1.02
  • FY23E: 1.21
  • FY24E: 1.39
  • FY25E: 1.52

Business Performance

Life Insurance

• VNB growth:
  • 2H22: 13.5% YoY
  • 4Q22: 30% YoY
• Core agency team productivity:
  • 31.7% YoY growth in FYP
  • 10.3% YoY growth in first-year commission income
• High-productivity agent headcount: Stabilized in 2022
• VNB margin (FYP):
  • 2H22: 13.5%
  • 4Q22: 11.6%
• Surrender rate (%):
  • 2H22: 0.71
  • 4Q22: 1.51
• Agency FYP:
  • 2H21: 6,640
  • 2H22: 8,163
  • YoY growth: 22.9%

Property & Casualty (P&C)

• Combined ratio (%):
  • FY22: 97.3% (vs. industry average 99.0%)
  • Auto: 96.9% (vs. PICC P&C 95.6%, Ping An P&C 95.8%)
  • Non-auto: 98.1% (vs. PICC P&C 100.6%, Ping An P&C 110.1%)
• Underwriting profit:
  • FY22: RMB3,884 mn (up 202% YoY)
• Premium income:
  • FY22: RMB170,377 mn (up 11.6% YoY)
  • Auto: RMB97,992 mn (up 6.7% YoY)
  • Non-auto: RMB72,385 mn (up 19.0% YoY)

Valuation

• P/E (12M forward):
  • FY23E: 0.3x
  • FY24E: 0.7x
  • FY25E: 1.2x
• P/BV (12M forward):
  • FY23E: 0.7x
  • FY24E: 0.7x
  • FY25E: 0.6x
• Dividend yield:
  • FY23E: 6.8%
  • FY24E: 7.8%
  • FY25E: 8.6%
• ROE:
  • FY23E: 12.5%
  • FY24E: 13.3%
  • FY25E: 13.2%

Market Position

• Market Cap (HK$ mn): 57,165.0
• Average 3-month total return (HK$ mn): 20.9
• 52-week High/Low (HK$): 23.05 / 12.20
• Total issued shares (mn): 2,775.0

Shareholding Structure

• China Baowu Steel Group: 14.1%
• Shenergy (Group): 13.8%

Key Views and Outlook

• VNB growth: Positive trend sustained into 4Q22 and expected to continue in FY23.
• DPS growth: Increased 2% YoY to RMB1.02 per share in FY22, with sustainable growth expected.
• Valuation: CPIC-H is trading at 0.3x P/EV FY23E and 0.7x P/BV FY23E, with a 6%+ dividend yield and 12%+ ROE expected.
• Capital position: Remained sound under C-ROSS 2.0.
• Payout ratio recovery: Expected to recover further after capital replenishment via perpetual bonds.

Analyst Ratings

• CMBIGM Rating: BUY
• Target Price: HK$29.72
• Up/Downside: 44.3%

Conclusion

CPIC's performance in FY22 was marked by positive VNB growth and improved P&C combined ratio. The company is expected to maintain its positive VNB growth and sustain DPS growth in FY23, which should support upward re-rating. The BUY rating reflects confidence in its potential to deliver over 15% returns in the next 12 months.