Bottom line: Ping An FY24 operating profit growth was in line with company-compiled consensus, but below GSe/Visible Alpha consensus, due to 1) Rmb10bn loss in the asset management segment in 4Q, 2) revision to OPAT investment return assumption, and 3) lower-than-expected bank profit. Net profit increased 48% yoy, in line with company-compiled consensus, on the back of strong equity investment results in 2024 (vs. 2023). Company announced a final dividend of Rmb1.62 per share, bringing FY24 DPS to Rmb2.55, +5% yoy and 3%/2% ahead of GSe/consensus.
　　While losses in the asset management segment narrowed yoy, from Rmb21bn in FY23 to Rmb12bn, we expect investors to focus on management comments on asset quality outlook in FY25, at the result call on Mar 20, 10am HK time.
　　In addition, we expect life insurance results to be in focus, especially 1) life NBV outlook, as strong NBV growth in FY24 was offset by the impact of a lower investment return assumption (4% vs. 4.5% in FY23) in a low-yield environment; and 2) decline in life CSM (-5% yoy), due to negative impacts from changes in operating assumptions, and the impact on FY25 OPAT. For the group, we would also focus on management comments on strategy in the technology segment, given several changes in ownership structure over the last 12 months.
　　Key numbers and takeaways:
FY24 OPAT was Rmb121.9bn, +9% yoy on a like-for-like basis, and in-line with company-compiled like-for-like growth rate of 9%. This is well below our expectation of Rmb145.8bn, due to 1) Rmb10bn additional loss in the asset management segment in 4Q24, 2) revision to OPAT investment return assumption (from 4.5% to 4%), and 3) lower-than-expected bank profit.
FY24 net profit was Rmb126.6bn, +48% yoy, on the back of strong equity investment result in 2024 (vs. 2023).
Ping An declared a final dividend of Rmb1.62 per share, +8% yoy, bringing FY24 DPS to Rmb2.55, +3%/+2% ahead of GSe/company compiled consensus. This implies a 37.9% (vs. 37.3% in FY23) payout ratio on OPAT basis.
Life NBV was Rmb40bn, +29% on like-for-like basis (based on FY23 assumption), 4% below GSe but in line with company-compiled consensus.
　　However, after reflecting the latest economic assumptions (i.e. investment return at 4% vs. 4.5% in FY23 and 7.5%/8.5% discount rate vs. 9.5% at FY23), NBV declined to Rmb28.5bn, 8% lower yoy.
Life NBV margin expanded by 7pt to 26%, reflecting the margin improvements from both agency and bancassurance channel, +11pt/+8pt respectively.
Life EV was Rmb960.6bn using FY23 assumptions, +16% yoy and 3%/4% above GSe/ VA consensus. After updating to new economic assumptions, EV declined to Rmb835.1bn.
Life CSM (contractual service margin) balance was Rmb731bn at FY24 year-end, -5% yoy, -5%/-4% below GSe/Visible Alpha consensus. In addition to lower new business contribution in 2H24, Ping An booked a Rmb22bn negative impact from changes in estimates and a Rmb10bn negative impact due to changes in financial risks related to participating & universal life products.
Agent headcount was 363k as of FY24, flat qoq and +5% vs. FY23 year-end.
P&C combined ratio (COR) was 98.3%, down 2.3pt yoy, vs.
　　GSe/company-compiled consensus of 98.2%/98.5%. Auto COR was 98.1%, 0.4pt higher yoy due to lower risk discount rate and increasing loss from natural disasters. Underwriting profit was Rmb5.5bn in FY24, vs. Rmb-2.1bn in FY23, mainly reflecting the significant loss-narrowing from liability and guarantee insurance segments, which has improved to Rmb-0.6bn/Rmb-0.2bn in FY24, from Rmb-1.4bn/Rmb-6.8bn in FY23.
Life/P&C core solvency ratio has decreased by 3pt/5pt qoq to 116%/171% in 4Q24.
Shareholders’ equity was Rmb929bn as of FY24, +3% yoy.