Jinwu Financial News | According to Guolian Securities Research, China Financial Insurance (02328) achieved auto insurance premium income of 24.479 billion yuan in March, an increase of 3.1% over the previous year. The growth rate of the company's car insurance premiums improved month-on-month, and is expected to contribute mainly to the new car business and renewal business. In March, retail sales of passenger cars in the narrow sense of the word in China increased 6.0% year on year. It is expected to be mainly driven by the trade-in policy. Looking at the whole year, driven by the increase in automobile production and sales and the trade-in policy, the bank expects the company's car insurance premiums to increase by about 5%.
According to the bank, with regard to car insurance COR, 24Q1 is affected by disasters such as freezing rain, etc., and the company's payout rate is expected to be under pressure year on year, which in turn has led to a year-on-year increase in car insurance COR. However, considering that the implementation of “integrated reporting” of car insurance promotes the improvement of cost rates, the company's car insurance COR is expected to remain at a good level. Looking at the whole year, as the company continues to optimize its car insurance business structure and focus on risk reduction management, the company's car insurance payout rate is expected to remain stable. At the same time, as supervision continues to strengthen the control of car insurance expenses, the company's car insurance fee rate is also expected to improve year on year. The bank expects the company's car insurance COR to improve below 97% in 2024.
The bank said that given the company's continued focus on high-quality development, COR is expected to continue to improve in 24 years. The year-on-year improvement in combined investment income is expected to support the increase in net profit, and the company's ROE is expected to reach more than 12%. The bank expects the company's net profit to be 282/314.33.3 billion in 2024-2026, respectively, with corresponding growth rates of 15%/11%/6%, respectively. Given the company's scarce business model and high ROE, the bank gave a target price of HK$13.0, maintaining a “buy” rating.