【行业研究报告】保诚-NBP beat driven by better 2H margin; expect FY24 DPS to continue growing by 7%-9%

PrudentialreportedstrongFY23resultswithnewbusinessprofit(NBP)jumpingby
PrudentialreportedstrongFY23resultswithnewbusinessprofit(NBP)jumpingby
45%YoY(CER)toUS$3.13bn,beatingconsensusby6.4%,thanksto+3pptNBP
marginexpansionto53%infullyear.TheGroup’sNBPmargin(NBM)sequentially
improvedin2H23to57%from49%in1H23,drivenbyatrendofmarginrecovery
in2Hinalmostallkeymarkets,exceptthemainlandJVCPL,whoseNBPfellby
70%YoYin2H23,adverselyaffectedbytankedbancassurancesalesand
unfavourableeconomicsentimentthatdraggeddowndemandforprotections.
HongKongsustainedstrongmomentuminto4Q23withNBPupby3.3xYoYin
2H23,reflectingitsmarket-firstpositionformainlandChinesevisitors(MCVs).On
parwiththeGroup’s5-yeargrowthstrategythrough2027,thestrongNBPfigure
fuelledaswinginIFRSprofitafter-taxtoUS$1.7bninFY23,vsaUS$1.0bnlossin
FY22.Tohighlight,theboardapprovedfull-yeardividendofUS$0.2pershare,
implyinga9%increaseoverFY22,andguidedcontinuedDPSgrowthby7%-9%
inFY24.Lookingahead,wearepositiveontheinsurer’scontinuedcapexonnew
businessgrowth,improvedH&P(Health&Protections)focus,andbalanceb/w
capitalallocationandshareholders’return.ThetradingliquidityinHKandChina
macroexposuremighthavesuppressedthestockprice;yetinthelongterm,we
believethecompany’sfundamentalsshouldstayintact.MaintainBUYwithTP
adjustedtoHK$137.8toreflectmark-to-marketdiscountratesandEEVsensitivity.
StrongNBPbymarketanddistributionchannel.AgencyNBPsawa
significantincreaseby+75%YoYtoUS$2.1bn,drivenby1)37%YoYNBP
growthfromH&P,and2)a59%increaseinactiveagentproductivity,measured
byavg.monthlyNBPperagent.Thebancassuranceslidby8%toUS$793mn,
draggedbyworsenedperformanceinChinaandVietnam.TheNBPofCITIC
PrudentialLife(CPL),theChinaJV,droppedby43%YoYtoUS$222mnin
FY23underjointeffectsofa40%YoYAPEsalesdeclineand2pptmargin
contraction.Excludingtheeffectsofinterestrateandeconomicmovement,
NBMwouldriseby6pptYoY,pulledby+2pptgrowthinagencyand+8pptuptick
inbancassurance,asaresultofproductre-pricingandamorebalancedproduct
propositionunderanindustry-widere-ratingofpremiumratesin2H23.
ExpectUS$1bncapitaldeploymentinFY24E.Despitea33%increasein
investmenttonewbusiness,theGroupmaintainedsolidcapitalflexibilityanda
with-targettotalleverageratioat20%.TheIFRSadjustedoperatingprofitgrew
by8%YoY(CER)toUS$2.9bnduetolowercentralcosts(-23%)and
restructuringcosts(-31%),andaprofitincreaseofEastspringby10.4%YoY.
Theoperatingfreesurplusgenerationfromin-forceinsuranceandAMflattedat
US$2.7bnasnegativechangesinoperatingassumptionsandexperience
variancesenlarged.TheGroupproposedtodeployUS$1bnondistributionfor
organicgrowthbyreinforcingtechnologyinfrastructureandoptimizingH&Pmix.
Valuation:ThestockisnowtradingatFY24E0.54xP/EV,nearthehistorical