【行业研究报告】保诚-Strong new biz momentum from China JV

3Mar20233Mar2023CMBInternationalGlobalMarkets|EquityResearch|CompanyUpdatePrudentialPlc.(2378HK)StrongnewbizmomentumfromChinaJVPrudentialPlc.willreportFY22resultson15March(Wed).WeexpecttoseedecentAPE(annualizedpremiumequivalent)growthin2H22onthebackofrecoveryinnewbusinessmomentumofSouthEastAsian(SEA)markets.Ontheotherhand,NBP(newbusinessprofit)marginislikelytoseedowntrendin2H22,primarilyduetonegativeassumptionchangesofinterestratehikesacrosstheinsurer’skeyoperatingmarkets,exceptforChina.Lookinginto2023,webelievetheinsurerwilldeliverstrongNBPgrowthinbothHKandmainlandChinamarkets,given1)thereleaseofpent-updemandsofMainlandChinaVisitors(MCVs)toboostnewbusinesspremium(NBP)growthinHK,and2)ourchannelcheckresultssuggestingPru’sChinaJV,CITIC-PrudentialLife(CPL),potentiallyrecorddouble-digitAPEgrowthin2023jumpstartseason.WeexpectthattheturnaroundofnewbusinessmomentuminChinaJVandPruHKwillunderpinoverallhigh-teenNBPgrowthofPruin2023E.ReiterateBUY.StrongnewbusinessmomentuminChinaJVby2023jumpstart.Basedonourrecentchannelchecks,weestimatethatCPLcapturedadouble-digitAPEYoYincreaseinthe2023jumpstartseason,windinguprobustgrowthinbothagencyandbancassurancechannels.Webelievethepick-upinnewbusinessmomentumwasincrementallydrivenby1)enhancedagentproductivity,and2)ashiftintargetsofwealthallocationforhigh-net-worthindividualstowardssavings-relatedproducts.Weexpectthestrongnewbusinessgrowthtosustainin2023E.HK-MainlandborderreopeningfuelledNBPmomentuminHK.AccordingtodatafromHKImmigrationDepartment,upto6Feb,thedateofHK-Chinafullyborderreopening,theaveragedailytrafficofMainlandChinaVisitors(MCVs)roseto45kwithinonemonthto1Mar,amountingto38%ofthefigurein2019.Sofar,theMCVdailytrafficisstillontherise,giventheaveragedailytrafficlastweek(23Feb-1Mar)reaching47%oftheamountin2019.Withtheliftingmaskmandateon1Mar,weexpectthetrafficnumberwillfurtherpickupinresponsetoaneasingenvironment.Giventhis,webelievePru’snewbusinessgrowthwillcometofruitionin2023underthereleaseofincreasingMCVs’pent-updemands.Valuation:Thestockisnowtradingat1.0xP/EVFY23Eand2.2xP/BVFY23E.Webelievetheinsurer’srallyinHKMCVbusinessandrobustgrowthmomentuminChinaJVarepoisedforsequentialreboundofitsNBPgrowthin2023.Besides,expandingmass-affluentmarketsinAsiarackupsustainableprotectiondemandsinpursuitofwealthgrowth,whichwillenhancethefundamentalforstockre-rating.TargetPriceHK$143.00(PreviousTPHK$143.00)Up/Downside17.5%CurrentPriceHK$121.70ChinaInsuranceGigiCHEN,CFA(852)39163739gigichen@cmbi.com.hkNikaMA(852)39000805nikama@cmbi.com.hkStockDataMktCap(HK$mn)334,635Avg3mthst/o(HK$mn)30.5852wHigh/Low(HK$)136.50/68.75TotalIssuedShares(mn)2,750Source:BloombergShareholdingStructureBlackRock8.59%Vanguard5.62%Source:BloombergSharePerformanceAbsoluteRelative1-mth-6.2%0.4%3-mth32.6%20.5%6-mth50.1%42.6%Source:FactSet12-mthPricePerformanceSource:FactSetRecentReports:1.PrudentialPLC(2378HK)-Asia-focusleadingplayer;border-reopeningtailwindsin2023(link)Auditor:KPMGLLPEarningsSummary(YE31Dec)FY20AFY21AFY22EFY23EFY24ENetprofit(US$mn)2,118(2,042)1,2492,0672,677OperatingEPS(US$)0.871.020.901.081.24ConsensusOperatingEPS(US$)n.an.a0.841.141.33VNB/share(US$)0.81.00.81.01.1YoYgrowth(%)(37.7)13.4(13.9)17.712.3GroupEV/share(US$)20.717.214.916.317.9Premiumincome(US$mn)21,87022,37324,17727,73831,332Premiumincomegrowth(%)(49.7)2.38.114.713.0P/B(x)1.92.52.42.22.0P/Embeddedvalue(x)0.80.91.01.00.9Dividendyield(%)1.01.10.81.21.5ROE(%)10.5(10.8)7.211.313.3Source:Companydata,Bloomberg,CMBIGMestimatesNote:stockpricequotedbymarketcloseat4:00pmon2Mar2023.