Guolian: Maintain a "buy" rating for PICC P&C (02328), with the expectation of achieving a good increase in annual net profit.

Guolian released a research report stating that due to the unique business model and high ROE of PICC P&C (02328), they maintain a "buy" rating. They estimate the company's net profit attributable to shareholders for 2024-2026 to be 281/307/341 billion respectively, with corresponding growth rates of 14%/9%/11%. Given the company's continued focus on high-quality development and priority on efficiency, they expect the company's COR to continue to improve in 2024. Improvements in the asset side environment are expected to drive investment income improvement, leading to good profit growth for the company in 2024. In this context, the company's ROE is expected to exceed 10%. Event: The company released its premium income announcement for August 2024, achieving premium income of 37.375 billion yuan, an increase of 7.0% year on year, with auto insurance up by 4.4% and non-auto insurance up by 12.2%. Guolian's main points are as follows: - Auto insurance increased by 4.4% year-on-year in August, mainly due to an increase in average premiums. - The company achieved auto insurance premium income of 24.171 billion yuan in August, up by 4.4% year-on-year, mainly due to an increase in average premiums. Compared to the previous month, the growth rate of the company's auto insurance premiums in August increased compared to July (+3.9%), mainly due to a narrower decline in new car sales. In August, China's narrow definition of retail passenger vehicle sales decreased by -1.0% year-on-year (compared to -2.8% in July). For the whole year, with the continued strengthening of the policy to replace old vehicles with new ones driving improvements in new car sales and continued increase in average premiums, the company's auto insurance premiums are expected to achieve steady growth. Regarding auto insurance COR, as the company continues to upgrade its risk reduction service levels and optimize its auto insurance business structure, the company's auto insurance claims ratio is expected to improve. Moreover, with regulatory measures guiding rational competition in auto insurance driving improvements in expense ratios, the bank predicts that the company's auto insurance COR is expected to improve to below 97% in 2024. - Non-auto insurance increased by 12.2% year-on-year in August, mainly driven by accident insurance and credit guarantee insurance. In August, the company achieved non-auto insurance premium income of 13.204 billion yuan, up by 12.2% year-on-year (compared to +17.4% in July), continuing a good growth trend in non-auto insurance. By type of insurance, accident insurance, credit guarantee insurance, and liability insurance all achieved rapid growth. Specifically, in August, the company's accident insurance premiums increased by 30.7% year-on-year, mainly due to the company actively promoting individual accident insurance sales. In addition, in August, the company's credit guarantee insurance and liability insurance premiums increased by 27.7% and 22.9% year-on-year respectively, mainly due to the low base in the same period last year. In August 2023, the company's credit guarantee insurance and liability insurance premiums decreased by -20.0% and remained stable respectively. For the whole year, with China's continuous economic recovery and policies supporting the development of property insurance, the company's non-auto insurance premiums are still expected to achieve double-digit growth. Regarding non-auto insurance COR, as the company continues to optimize its business structure and the empowerment effect of risk reduction services gradually manifests, the company's non-auto insurance claims ratio is expected to improve year-on-year. Based on this, the bank predicts that the company's non-auto insurance COR is expected to remain below 100% in 2024. Risks: intensification of market competition, unexpected natural disasters, significant fluctuations in the capital market.