Quality-oriented improvement might continue in 2023E
　　NBV growth across the life sector were under tremendous pressure in 2022, partly due to agent force contraction and NBV margin decline.
　　However, the Company’s NBV growth turned positive for the third quarter of 2022 and achieved enhanced sales forces quality in 1H22. In more details, the monthly average FYP per core agent reached RMB32,331, up by 23.5% yoy, monthly average FYC per core agent up by 10.8% yoy, and per-agent NBV up by ~11% yoy in 1H22. In our view, its positive NBV growth for 3Q is largely driven by its new Basic Law, the NBS (needs- based selling) processes, and the cultivation of normalized selling based on activity management. As the Company accelerated agency force restructuring towards career-based development, professionalism and digitalization (likely with gradually stabilized agent headcount), we expect the quality-oriented improvement to continue in 2023E for the Company.
　　Positive outlook on the asset side; undemanding valuation
　　In December, the Politburo meeting emphasized that "stability is the top priority and progress should be made in stability", and urged to do a good job in "stabilizing growth, stabilizing employment, and stabilizing prices".
　　Meanwhile, accommodative policies on property, infrastructure and manufacturing should underpin business cycle to normalize. The potentially stabilized economic conditions might positively impact China’s life players’ investment performance, and help to reduce their risks on real estate investment. Note that CPIC’s P/EV ratio will still fall short of 1x (Fig. 7) if we assume its entire VIF is zero and further assume a valuation discount equivalent to 5% of its investment assets taking into account real estate investment risks. The resulted valuation suggests most risks have been priced in for CPIC.
　　Raise TP to HKD27.0; Maintain BUY
　　CPIC is trading at ~0.77x 22E PB, or ~0.30x 23E P/EV, or ~0.72x 23E P/B.
　　Maintain BUY on valuation, its quality-oriented improvement, and the positive outlook on the asset side. Raise TP by ~11% to HKD27.0, equivalent to ~0.38x 23E P/EV (~0.37x 22E P/EV previously applied), or 40% discount to its past 5-yr average P/EV. Key catalysts: a good capital market, higher-than-expected NBV growth; key downside risks: an adverse capital market, lower-than-expected NBV growth.