20181129-招商证券_香港_-China_insurance_sector_Positive_long-term_growth_prospects_for_life_sector_6页_742kb

报告摘要

China Insurance Sector Industry Report Summary

Core Content

This report provides an analysis of the China insurance sector, with a particular focus on the life insurance segment. It outlines the long-term growth prospects, valuation trends, and investment ratings for key players in the sector, including Ping An, CPIC, China Life, and NCI. The report also highlights short-term challenges in savings products and agent productivity as a key differentiator for Ping An.

Main Points

1. Positive Long-Term Outlook for Life Insurance

The life insurance sector is expected to benefit from rising long-term health insurance demand.
High out-of-pocket health expenditures in China (35.0% in 2015, 28.8% in 2017) compared to developed countries suggest room for growth in health insurance coverage.
Steady growth in health insurance GWP is anticipated due to the increasing burden of health costs and the lack of comprehensive insurance coverage.

2. Improving NBV Growth in 4Q 2018

NBV growth is expected to improve in the fourth quarter of 2018 due to:
- A stabilizing life insurance business in Q2 and Q3.
- A low-base effect following the contraction in 4Q 2017, particularly for CPIC and NCI due to Circular No.134.
Protection products are gaining emphasis, which may lead to a more balanced life insurance business across quarters.

3. Valuation Trends

The life insurance sector is currently undervalued, with P/B ratios around 1.4x and P/EV ratios at 1.2x to 1.8x.
Ping An is highlighted as being below its historical average valuation, with a target price of HKD 109 and 1.5x 19E P/EV.
NCI, CPIC, and China Life are also trading at the low end of their historical valuation ranges, indicating attractive investment opportunities.

Key Players and Investment Ratings

Company	Ticker	Rating	Current Price (HK$)	Target Price (HK$)	Upside (%)
Ping An	2318 HK	BUY	75.8	109.0	43.8%
CPIC	2601 HK	BUY	27.8	54.6	96.4%
China Life	2628 HK	BUY	16.8	32.9	95.8%
NCI	1336 HK	BUY	34.5	51.2	48.4%

Key Highlights:

Ping An is the top pick due to its superb life agent productivity, which is 40% higher than peers.
Agent quality is a key driver of sustainable growth in the life insurance sector.
Technology-equipped sales support and customer services are contributing to Ping An's competitive edge.

Short-Term Challenges

Savings products are under pressure due to:
- Low interest rates (2.5% to 3.5%), which are less attractive than bank wealth management products.
- Shift in focus toward protection products by insurance companies, leading to a more balanced business model.
The FYP growth for 2019 jumpstart season is not expected to be strong, but NBM and NBV are likely to remain steady due to protection product demand.

Investment Considerations

Key catalysts for the sector include:
- A good capital market.
- Robust NBV growth.
Key downside risks include:
- Adverse capital market conditions.
- Lower-than-expected 2019 jumpstart performance.

Valuation Comparison

Company	P/EV (2018e)	P/EV (2019e)	P/E (2018e)	P/E (2019e)	P/B (2018e)	P/B (2019e)	ROE (2018e)	ROE (2019e)
Ping An	1.2	1.0	12.1	10.2	2.3	1.8	19.4%	19.7%
CPIC	0.7	0.6	11.4	9.6	1.4	1.2	13.4%	13.8%
China Life	0.5	0.4	9.3	7.7	1.1	1.0	12.5%	13.2%
NCI	0.5	0.5	12.6	10.2	1.3	1.2	11.3%	12.3%

Analyst and Regulatory Information

Analyst: Felix LUO, PhD
Contact: +852 3189 6288, felixluo@cmschina.com.hk
Disclaimer: This document is for information purposes only and does not constitute investment advice.
Regulatory Note: The report is subject to important disclosures and is not available to the general public in certain jurisdictions, including the United States, Japan, and Canada.

Conclusion

The China insurance sector, particularly the life insurance segment, is viewed as positive for long-term growth due to rising health insurance demand and improving NBV growth. Ping An stands out as the top pick due to its superior agent productivity and attractive valuation. While savings products face short-term challenges, the protection segment is expected to drive sustainable growth. Investors are advised to consider the valuation and market conditions before making decisions.