Wei Tao of Huaxi Securities and others commented that the debt side is affected by economic factors in the short term, but the long-term logic of increasing the penetration rate of insurance products is still in place; the more active equity allocation at the investment side makes insurance companies bear more market fluctuations, but in the long run, investment income will bring performance thickening for the second half of this year and next year. Plate valuation and institutional positions are at a low level in the past three years, so it is recommended to actively allocate. The beneficiaries are China Life Insurance and Xinhua insurance.
Haitong Securities is also optimistic about the insurance sector. Haitong Securities sun Ting, he ting and others recently released research reports that the asset side and liability side of the insurance industry are expected to continue to improve, and there is a large space for valuation improvement.
1) Chinas Taiping released a medium-term performance forecast, with net profit in the first half of the year down 57%. Due to the influence of factors such as high profit base caused by large tax reduction and reversal in the same period of 2019, and over provision due to downward 750 day curve, the growth rate of net profit of insurance companies in the first half of 2020 is under pressure.
2) The CBRC issued the three-year action plan for promoting the high-quality development of property insurance industry (2020-2022). The plan puts forward specific plans for the development of the property insurance market in the next three years from four aspects: the direction of industry transformation and development, the ability to serve the national economy and peoples livelihood, the level of opening up, regulatory policies and institutional mechanisms.
Specifically, in the direction of industry transformation and development, we should improve the level of digital technology, support property insurance companies to formulate digital transformation strategies, and encourage property insurance companies to use scientific and technological means such as big data, cloud computing, blockchain, artificial intelligence to update and reengineer the traditional insurance operation process. By 2022, the online rate of major business areas will reach more than 80%.
Haitong Securities believes that with the recovery of the economy, the improvement of both the liability side and the asset side will lead to a significant repair of the valuation of the insurance sector. The company recommends China Life Insurance, Xinhua insurance, China Ping An, China Pacific Insurance, etc.
Source of this article: Yang Bin, editor in charge of CFA_ NF4368