Investor Notes - Phillip Securities (HK) Ltd

18 Oct, 2024 (Friday)

CHINA LIFE(2628)
Analysis：
Recent policy combinations have brought clear long-term benefits to the insurance industry. The unexpectedly strong policy combinations from two meetings, coupled with the rapid market recovery, have created a Davis resonance on both the asset side and the liability side for listed insurance companies. Interchangeable convenient tools are expected to provide new investment strategies for insurance companies, increasing flexibility on the investment side through leverage. On October 16, China Life announced that the net profit attributable to shareholders of the parent company for the first three quarters of 2024 is expected to be approximately 101.135 billion yuan to 108.767 billion yuan, an increase of about 62.971 billion yuan to 70.603 billion yuan compared to the same period in 2023, a year-on-year growth of about 165% to 185%. The announcement stated that the company adheres to the principles of asset-liability matching and long-term, value, and prudent investment concepts, seizing market opportunities to carry out cross-cycle allocation and continuously promote the optimization of equity investment structure. The stock market significantly rebounded in the third quarter of 2024, and the company's investment income increased significantly year-on-year. The company has over 20,000 branches and outlets in 36 provinces (autonomous regions, municipalities directly under the central government, and separately planned cities) nationwide, nearly 800,000 employees and sales personnel, over 5,000 service counters, as well as branches and representative offices in Hong Kong, Macau, Singapore, Indonesia, London, New York, and other locations, providing financial insurance services to over 800 million customers.
Strategy：
Buy-in Price: $15.64, Target Price: $17.21, Cut Loss Price: $14.10

Report Review of August 2024

Sectors:

TMT, Semiconductors, Consumer & Healthcare （Eric Li）

This month I released reports of 361 DEGREES INT. (1361.HK).

During 2023FY, 361 Degrees International Limited (361 Degrees) recorded a revenue of RMB8,423.3mn, increasing 21.0% YoY. Profit attributable to the equity shareholders of the Company was RMB961mn, representing a YoY increase of 28.7%. A total dividend of HK20.4 cents per ordinary share (equivalent to RMB18.7 cents), representing a dividend payout ratio of 40.2%.

In terms of product segment, sales of the company's two core product lines, namely footwear and apparel, increased by 23.0% YoY and 9.8% YoY respectively. For the year under review, the proportions of total revenue of footwear and apparel sales were slightly increased from 41.0% to 41.7% YoY and slightly decreased from 35.2% to 31.9% YoY of the total revenue respectively. This was mainly due to the increase in proportion of sales revenue from 361 Degrees Kids from 20.7% to 23.2% of the total revenue for the year under review, which in turn affected the proportion of sales of various products to total revenue. The average wholesale price (AWP) of footwear and apparel edged up by 3.0% and 0.5% year-on-year respectively. The increase in footwear's and apparel's AWP was mainly due to the upward adjustments of the wholesale prices of the existing products across different product lines in order to cover the increase in cost of production and reflect the continuous brand image enhancement; the upgrade of product mix by launching a variety of new products with a higher AWP; and the increase in proportion of sales revenue generated from the e-commerce business which has a higher AWP than the sales made to distributors, above reasons contributed to increase in AWP as compared to that of last year. In addition, the sales volume of footwear and apparel products increased by 19.4% and 9.4% YoY, respectively.

In recent years, as China's consumer preferences leaned towards specialisation, diversification, and cost effectiveness, the company positions as a "professional, youthful, and internationalised" brand. The company has built a diversified brand matrix based on professional functions and its own-branded IP. With 2024 bringing numerous international and domestic sports events, including the highly anticipated Paris Olympics, which are expected to stimulate a broader participation in sports and increase consumer demand. We expect 2024-2025 EPS to be RMB0.49 and RMB0.53 respectively, with PT of HKD4.02, implies a FY2024E P/E of 7.47x (~2-yrs historical average). Our investment rating is “Accumulate”.

Click Here for PDF format...

Writer Info

Research Team

Tel: + (852) 2277 6555

Email:
research@phillip.com.hk

Enquiry : 2277 6666 OR investornotes@phillip.com.hk
If you cannot read this e-mail in the proper format, please click here to view the web version.

Information contained herein is based on sources that Phillip Securities (Hong Kong) Limited and/or its affiliates ( the “Group”) believe to be accurate. The Group does not bear responsibility for any loss occasioned by reliance placed upon the contents hereof. The Group (or its employees) may have interests in relevant investment products. For details of different products’ risks, please view the Risk Disclosures Statement on http://www.phillip.com.hk.

If you DO NOT wish to receive further marketing emails from us, please click HERE to opt-out.