研究报告全文：MN27Mar2023CMBInternationalGlobalMarketsEquityResearchCompanyUpdatePICCPC2328HKRemainedUWprofitablein2H22TargetPriceHK1244PICCPCdelivered579YoYgrowthinunderwritingUWprofitinFY22PreviousTPHK1244translatingintoRMB21bnUWgainsin2H22vsRMB39bnUWlossesin2H21UpDownside643TheinsurermanagedtoloweritscombinedratioCoRby20ptsYoYto976CurrentPriceHK757from996inFY21outperformingtheindustryaverage990acrossmajorpeersTheunderwritingUWmargincontinuedtoimproveYoYforthefourthChinaInsuranceconsecutivequarterleading2H22CoRto991-28ptsYoYand4Q22CoRGigiCHENCFAto1007-09ptsYoYMeanwhilelossreserveratioremainedsolidat41385239163739asofend-FY22up43ptsYoYimplyingathickenedbufferforpotentiallossgigichencmbicomhkabsorptionsinfutureLookingintoFY23weexpectPICCPCwillcontinuetooutpaceindustryaverageacrossmajorpeersintermsofUWmargingiventheNikaMAinsurerspersistentfocusonqualityandefficiencyovervolumeReiterateBUY85239000805nikamacmbicomhkAutoUWprofitincreased694YoYinFY22AutoCoRdeclinedby17ptsYoYto956inFY22comprisingofalossratiodown20ptsYoYwithStockDataanexpenseratiomoderatelyup03ptsYoYThedeclininglossratiowasMktCapHKmn522254Avg3mthstoHKmn74primarilydueto1improvedriskpricingcapabilitiesand2lesscatastrophic52wHighLowHK887689losseventsamidCOVIDrestrictionsBoththenumberofinsuredcarsandTotalIssuedSharesmn68990averagepremiumpercarincreasedinFY22onbackofahigherpurchaseSourceFactSetrateofcommercialautoinsuranceLookingintoFY23weexpecttheShareholdingStructureinsurersautolossratiomayedgeupgivenrecoveryinbusinessactivitiesPICCGroup690contributingtohigherpossibilityandfrequencyinlosseventspostCOVIDFreeFloat310SourceHKExNon-autoCoRdeclinedby28ptsYoYinFY22equivalentto-40ptsYoYin2H22Amongnon-autosegmentsAHagriculturalandcommercialSharePerformancepropertyeachdelivered22pts87ptsand204ptsYoYUWmarginAbsoluteRelativeimprovementinFY22equivalentto33pts93pts424ptsYoYmargin1-mth5055expansionin2H22respectivelyHowevertheUWprofitincreasesinabove3-mth12-046-mth-104-193segmentswerepartiallyoffsetbyhigherCoRofliabilityandcreditguaranteeSourceFactSetinsurancesubjectto1along-taileffectofin-forcebusiness2increasedpersonalinjurycompensationstandardsand3thechangeinformationrate12-mthPricePerformanceofNEPasaresultofshiftsinbusinessstructureWenotedthatthelossratioofcreditguaranteeinsuranceremainedlowat456droppingby5ptsYoYfromayearaheadLookingintoFY23weexpecttoseeayear-over-yearimprovementinliabilityinsuranceasthelong-taileffectgraduallyphasingoutValuationPICCPCistradingat49xPEFY23Eand06xPBVFY23Ebelow2-yr5-yravgPEat51x61xand2-yr5-yravgPBVat07x08xrespectivelyagainstabove8dividendyieldsand138ROEexpectedWebelievethecontinuedstrengthsoftheinsurersUWprofitabilitydrivenbySourceFactSetitsmarket-leadingriskpricingmodelsandcostcontrolsalongsidealong-termfocusonimprovingshareholdersinterestswillbolsterthestockAuditorDeloittefundamentalRecentReportsEarningsSummary1PICCPC1H21performanceinlinelinkYE31DecFY21AFY22AFY23EFY24EFY25E2PICCPCAutogrowthpickupNetprofitRMBmn2236026708301983419538657Non-autoUWtoimprovelinkEPSReportedRMB1011201361541743PICCPCExpectCoRimprovementinFY22linkYoYgrowth711941311321304PICCPCCoRimprovementinConsensusEPSRMBnana1361521691Q22linkPremiumincomeRMBmn3969974254804595184962805359825PICCPCStrongbeatin1H22linkPremiumincomegrowth10728080806PICCPCContinualUWmarginCombinedratio996976980980980improvementlinkPEx6655494338PBx0707060605Dividendyield61728292105ROE115129138143149SourceCompanydataBloombergCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1MOREREPORTSFROMBLOOMBERGRESPCMBRGOORhttpwwwcmbicomhk27Mar2023PICCPC2328HK-FY22earningskeymetricsSourceCompanydataCMBIGMestimatesSourceCompanydataCMBIGMestimatesValuation12MforwardPEandPBVversushistoricalavgFigure1PICCPC12MforwardPEbelowhistoricalavgFigure2PICCPC12MforwardPBVbelowhistoricalavgSourceCompanydataCMBIGMNotethecompanystockpriceisSourceCompanydataCMBIGMNotethecompanystockpriceisquotedbymarketcloseat400pmon2432023quotedbymarketcloseat400pmon2432023PLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE227Mar2023Figure3PICCPCsgrowingDPSandDividendyieldsFigure4PICCPCsincreasingROEandestimatesSourceCompanydataCMBIGMNotethecolumnsandlinesindotSourceCompanydataCMBIGMNotethelineindotplotindicatesplotindicateCMBIGMestimatesthecompanystockpriceisquotedbyCMBIGMestimatesthecompanystockpriceisquotedbymarketclosemarketcloseat400pmon2432023at400pmon2432023PLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE327Mar2023FinancialSummaryINCOMESTATEMENT2020A2021A2022A2023E2024E2025EYE31DecRMBmnTotalincome412267419251442643481730521492564483Premiumswrittengross433187449533487533526536568658614151Premiumsearnednet393127396997425480459518496280535982Investmentincome177091799620180214532437927584Realizedgainslosses455145623193000Otheroperatingincome3120304176758834917Losses391542397747415854451233487294526237Selling260320292588305634332232358810387515Underwritingcommissions690756011660834657017095776633Otheroperatingexpense621474504349386533015752662088Equityinaffiliatespretax395145244130495659477137Pretaxincome246762602830919354534014645383Incometaxes380836634266531860226807Consolidatednetincome208682236526653301353412438576Minorityinterest0555637181Netincome208682236026708301983419538657BALANCESHEET2020A2021A2022A2023E2024E2025EYE31DecRMBmnAssetsCashshort-terminvestments971359098894907108117122590138448Totalfixedincomesecuritiesinvestment168511172851192970219828249257281500Totalequitysecuritiesinvestment110734143804140718160304181764205276Realestateassets303282959432214357273958743827Otherinvestments000000Premiumbalancereceivables501035539970085770948480393283Investmentinunconsolidatedsubs532625694558143639577035377388Deferredtaxassets5055711615054158071659717427Intangibleassets000000Otherassets131673125925147796160353174054189009Totalassets6468016826227518878411869390051046158LiabilitiesshareholdersequityInsurancepolicyliabilities314623340529386620429349475419525174Insurancereserves153780169606203083234237267884304222Unearnedpremiums159093169175181796193154205421218670Policyclaims000000Otherinsuranceliabilities175017481741195721142283STdebtcurrportionLTdebt290283798541690458595044555489Deferredtaxliabilities000000Otherliabilities11311998459110829137946164525193610Totalliabilities456770476973539139613153690389774274TotalcommonequityCommonstockordinarycapital222422224222242222422224222242Capitalsurplus114121141211347113471134711347Retainedearnings48030583187088589062109645132914Equityreserves117241122327116729116729116729116729Revaluationreserves618146410066755667556675566755OtherappropriatedReserves440154681538627386273862738627Totalshareholdersequity187513202887209856228033248616271885Minorityinterest251827622892000Totalequity190031205649212748228033248616271885Totalliabilitiesshareholdersequity6468016826227518878411869390051046158PLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE427Mar2023PERSHAREDATA2020A2021A2022A2023E2024E2025EYE31DecDPS038041048054061069EPSReported094101120136154174ConsensusEPSnanana136152169Noofsharesbasic222422224222242222422224222242PROFITABILITY2020A2021A2022A2023E2024E2025EYE31DecReturnonequityROE117115129138143149ReturnonassetROA343437383839Combinedratio989996976980980980Lossratio662737718723723723Expenseratio327259257257257257VALUATION2020A2021A2022A2023E2024E2025EYE31DecPE716655494338PB080707060605Divyield5761728292105SourceCompanydataCMBIGMestimatesNoteThecalculationofnetcashincludesfinancialassetsPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE527Mar2023DisclosuresDisclaimersAnalystCertificationTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportinwholeorinpartcertifiesthatwithrespecttothesecuritiesorissuerthattheanalystcoveredinthisreport1alloftheviewsexpressedaccuratelyreflecthisorherpersonalviewsaboutthesubjectsecuritiesorissuerand2nopartofhisorhercompensationwasisorwillbedirectlyorindirectlyrelatedtothespecificviewsexpressedbythatanalystinthisreportBesidestheanalystconfirmsthatneithertheanalystnorhisherassociatesasdefinedinthecodeofconductissuedbyTheHongKongSecuritiesandFuturesCommission1havedealtinortradedinthestockscoveredinthisresearchreportwithin30calendardayspriortothedateofissueofthisreport2willdealinortradeinthestockscoveredinthisresearchreport3businessdaysafterthedateofissueofthisreport3serveasanofficerofanyoftheHongKonglistedcompaniescoveredinthisreportand4haveanyfinancialinterestsintheHongKonglistedcompaniescoveredinthisreportCMBIGMRatingsBUYStockwithpotentialreturnofover15overnext12monthsHOLDStockwithpotentialreturnof15to-10overnext12monthsSELLStockwithpotentiallossofover10overnext12monthsNOTRATEDStockisnotratedbyCMBIGMOUTPERFORMIndustryexpectedtooutperformtherelevantbroadmarketbenchmarkovernext12monthsMARKET-PERFORMIndustryexpectedtoperformin-linewiththerelevantbroadmarketbenchmarkovernext12monthsUNDERPERFORMIndustryexpectedtounderperformtherelevantbroadmarketbenchmarkovernext12monthsCMBInternationalGlobalMarketsLimitedAddress45FChampionTower3GardenRoadHongKongTel85239000888Fax85239000800CMBInternationalGlobalMarketsLimitedCMBIGMisawhollyownedsubsidiaryofCMBInternationalCapitalCorporationLimitedawhollyownedsubsidiaryofChinaMerchantsBankImportantDisclosuresTherearerisksinvolvedintransactinginanysecuritiesTheinformationcontainedinthisreportmaynotbesuitableforthepurposesofallinvestorsCMBIGMdoesnotprovideindividuallytailoredinvestmentadviceThisreporthasbeenpreparedwithoutregardtotheindividualinvestmentobjectivesfinancialpositionorspecialrequirementsPastperformancehasnoindicationoffutureperformanceandactualeventsmaydiffermateriallyfromthatwhichiscontainedinthereportThevalueofandreturnsfromanyinvestmentsareuncertainandarenotguaranteedandmayfluctuateasaresultoftheirdependenceontheperformanceofunderlyingassetsorothervariablemarketfactorsCMBIGMrecommendsthatinvestorsshouldindependentlyevaluateparticularinvestmentsandstrategiesandencouragesinvestorstoconsultwithaprofessionalfinancialadvisorinordertomaketheirowninvestmentdecisionsThisreportoranyinformationcontainedhereinhavebeenpreparedbytheCMBIGMsolelyforthepurposeofsupplyinginformationtotheclientsofCMBIGMoritsaffiliatestowhomitisdistributedThisreportisnotandshouldnotbeconstruedasanofferorsolicitationtobuyorsellanysecurityoranyinterestinsecuritiesorenterintoanytransactionNeitherCMBIGMnoranyofitsaffiliatesshareholdersagentsconsultantsdirectorsofficersoremployeesshallbeliableforanylossdamageorexpensewhatsoeverwhetherdirectorconsequentialincurredinrelyingontheinformationcontainedinthisreportAnyonemakinguseoftheinformationcontainedinthisreportdoessoentirelyattheirownriskTheinformationandcontentscontainedinthisreportarebasedontheanalysesandinterpretationsofinformationbelievedtobepubliclyavailableandreliableCMBIGMhasexertedeveryeffortinitscapacitytoensurebutnottoguaranteetheiraccuracycompletenesstimelinessorcorrectnessCMBIGMprovidestheinformationadvicesandforecastsonanASISbasisTheinformationandcontentsaresubjecttochangewithoutnoticeCMBIGMmayissueotherpublicationshavinginformationandorconclusionsdifferentfromthisreportThesepublicationsreflectdifferentassumptionpoint-of-viewandanalyticalmethodswhencompilingCMBIGMmaymakeinvestmentdecisionsortakeproprietarypositionsthatareinconsistentwiththerecommendationsorviewsinthisreportCMBIGMmayhaveapositionmakemarketsoractasprincipalorengageintransactionsinsecuritiesofcompaniesreferredtointhisreportforitselfandoronbehalfofitsclientsfromtimetotimeInvestorsshouldassumethatCMBIGMdoesorseekstohaveinvestmentbankingorotherbusinessrelationshipswiththecompaniesinthisreportAsaresultrecipientsshouldbeawarethatCMBIGMmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreportandCMBISwillnotassumeanyresponsibilityinrespectthereofThisreportisfortheuseofintendedrecipientsonlyandthispublicationmaynotbereproducedreprintedsoldredistributedorpublishedinwholeorinpartforanypurposewithoutpriorwrittenconsentofCMBIGMAdditionalinformationonrecommendedsecuritiesisavailableuponrequestForrecipientsofthisdocumentintheUnitedKingdomThisreporthasbeenprovidedonlytopersonsIfallingwithinArticle195oftheFinancialServicesandMarketsAct2000FinancialPromotionOrder2005asamendedfromtimetotimeTheOrderorIIarepersonsfallingwithinArticle492atodHighNetWorthCompaniesUnincorporatedAssociationsetcoftheOrderandmaynotbeprovidedtoanyotherpersonwithoutthepriorwrittenconsentofCMBIGMForrecipientsofthisdocumentintheUnitedStatesCMBIGMisnotaregisteredbroker-dealerintheUnitedStatesAsaresultCMBIGMisnotsubjecttoUSrulesregardingthepreparationofresearchreportsandtheindependenceofresearchanalystsTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportisnotregisteredorqualifiedasaresearchanalystwiththeFinancialIndustryRegulatoryAuthorityFINRATheanalystisnotsubjecttoapplicablerestrictionsunderFINRARulesintendedtoensurethattheanalystisnotaffectedbypotentialconflictsofinterestthatcouldbearuponthereliabilityoftheresearchreportThisreportisintendedfordistributionintheUnitedStatessolelytomajorUSinstitutionalinvestorsasdefinedinRule15a-6undertheUSSecuritiesExchangeActof1934asamendedandmaynotbefurnishedtoanyotherpersonintheUnitedStatesEachmajorUSinstitutionalinvestorthatreceivesacopyofthisreportbyitsacceptancehereofrepresentsandagreesthatitshallnotdistributeorprovidethisreporttoanyotherpersonAnyUSrecipientofthisreportwishingtoeffectanytransactiontobuyorsellsecuritiesbasedontheinformationprovidedinthisreportshoulddosoonlythroughaUS-registeredbroker-dealerForrecipientsofthisdocumentinSingaporeThisreportisdistributedinSingaporebyCMBISingaporePteLimitedCMBISGCompanyRegnNo201731928DanExemptFinancialAdviserasdefinedintheFinancialAdvisersActCap110ofSingaporeandregulatedbytheMonetaryAuthorityofSingaporeCMBISGmaydistributereportsproducedbyitsrespectiveforeignentitiesaffiliatesorotherforeignresearchhousespursuanttoanarrangementunderRegulation32CoftheFinancialAdvisersRegulationsWherethereportisdistributedinSingaporetoapersonwhoisnotanAccreditedInvestorExpertInvestororanInstitutionalInvestorasdefinedintheSecuritiesandFuturesActCap289ofSingaporeCMBISGacceptslegalresponsibilityforthecontentsofthereporttosuchpersonsonlytotheextentrequiredbylawSingaporerecipientsshouldcontactCMBISGat6563504400formattersarisingfromorinconnectionwiththereportPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE6