Insurance
Xinhua Insurance has implemented the new "National Nine Rules" for dividend guidance for many times in a year, and the dividend distribution of insurance shares is expected to be more stable and further deepened. On May 24, the board of directors of Xinhua Insurance deliberated and passed the Proposal on the Arrangement of Mid term Profit Distribution in 2024, proposing "to reasonably consider the current performance, capital status and risk control index requirements, and to implement the mid term dividend distribution in 2024 under the condition that the company has profits available for distribution in the half year of 2024, with the dividend ratio not higher than 30%", This fully demonstrates the confidence of the company's senior management in the subsequent operation and management. At present, many state-owned big banks have responded to the requirements of the new "National Ninth Article" by defining the medium-term dividend plan. Xinhua Insurance is the first listed insurance company (Ping An has been implementing medium-term dividend for many years). It is expected that other insurance companies are also expected to follow up, and while further improving the expectation of more stable dividend distribution in insurance shares, the market will improve confidence in the profitability of insurance companies, It is expected that the attractiveness of high dividend related targets will be further enhanced. As of May 24, the dividend yield of Guoshou A, Ping An A, Taipao A and Xinhua A2023 was 1.3%, 5.5%, 3.5% and 2.5% respectively, while that of Guoshou H, Ping An H, Taipao H, Xinhua H, AIA H and Taiping H2023 was 4.0%, 6.3%, 5.3%, 5.6%, 2.7% and 3.5% respectively.
Short term market sentiment is repeated. Insurance stocks adjust to the overall market, and the market defensiveness is improved. The value of bargain hunting allocation of insurance stocks is still high. Looking ahead, the asset side repair of insurance shares is expected to remain unchanged, and the long-term interest rate is still low. It is expected that with the issuance of trillions of special treasury bonds, the long-term interest rate is expected to stabilize, and it may continue to fluctuate sideways in the short term; A series of easing policies for real estate have been implemented, but the effect of the policy and the improvement of economic fundamentals still need further observation. It is expected that the market fundamentals are expected to be further consolidated with the emerging effect of the policy on the real estate industry and the extension of consumer policies.
Investment suggestions: focus on five main lines, ① real estate risk mitigation: Ping An A, Xinhua A; ② Beta driven valuation rebound in equity market: Taiping H, Xinhua A; ③ Fundamentals of comprehensive liabilities and assets: CPIC A/H; ④ China's property insurance, the target of stable growth with prominent defense attributes; ⑤ An undervalued Internet property insurance subject with high elasticity of profits, Zhong'an Online. The comprehensive ranking is: China Taiping Insurance A/H, China Taiping H, China Property&Casualty Insurance H, China Ping An A, Xinhua Insurance A, and Zhong'an Online H.
Securities
The strict regulation of shareholders' shareholding reduction is expected to boost market confidence. On May 24, the CSRC issued the Interim Measures for the Administration of Share Reduction by Shareholders of Listed Companies, upgrading the share reduction system in the form of rules. The core content includes strictly regulating the reduction of large shareholders' holdings, such as prohibiting the reduction of shares through bidding/block trading under the circumstances of breaking the break, breaking the net, and failing to meet the dividend standards, increasing the obligation of pre disclosure, and the persons acting in concert should also comply with the reduction restrictions; Prevent bypass share reduction, such as the lock up period for the transferee of the negotiated transfer to reduce shares for six months, the parties continue to jointly abide by the restrictions on share reduction after the split of shares such as divorce, dissolution, separation, etc., and prohibit the refinancing and lending of restricted shares and the selling of securities financed by restricted shareholders; We will refine the provisions on liability for violations, clarify that illegal share reduction can be ordered to buy back and turn over the price difference to the listed company, and list the specific circumstances that should be punished. We believe that the improvement and upgrading of the share reduction system will severely restrict the illegal arbitrage of shareholders in the secondary market, which is expected to boost market confidence.
The new policies for capital market reform were introduced intensively and rapidly, which reflected the firm will of regulatory reform, and we must pay attention to the securities business sector. Since the middle of April, in order to implement the new "National Nine Articles", the CSRC and the Exchange have successively introduced a series of systems for investment banking business, strengthened the supervision of listed securities firms, private fund operations, regulations on the management of transaction costs of public funds, investor protection, program trading, delisting dividend reduction and other regulatory measures for listed companies, reflecting the "investor oriented" supervision We believe that the new round of reform of the capital market will promote fundamental changes in the market ecology, which is expected to promote the return of the value of the primary and secondary markets. In the next stage, further deepening the investment side reform may be the focus.
Investment suggestion: Looking forward to June August this year, we believe that under the catalysis of expectations such as the market breakthrough in the early pressure platform (at the market level)/investment side deepening reform (at the policy level)/the positive increase in the approximate rate of performance in 24Q2 (at the performance level), securities companies are expected to welcome the "medium-term volatility" market again, and the current plate layout has a high cost performance ratio. In terms of the main line, we should continue to focus on the main line of M&A+state-owned capital increase in the securities business sector, and we suggest to focus on the relevant targets: Huatai Securities, China Galaxy, and CICC.
Risk warning
1) Tighter insurance supervision: or it has a negative impact on the sales of new orders; 2) Equity market fluctuation: it will directly reduce the company's investment income and drag down profit performance; 3) Long term interest rates have declined significantly: further causing the market to worry about the spread loss of insurance companies; 4) The capital market reform was less than expected: the investment side reform such as the introduction of medium - and long-term funds was less than expected or bad for the wealth management and institutional business of securities firms.
