Morgan Stanley cited China Life Insurance (02628) management on Morgan's Asia Pacific Summit guiding for double-digit VNB (value of new business) growth in 2020.
Despite a high base in 2019 (trending at 20% VNB growth year-to-3Q), management is confident that the strong momentum can be maintained into 2020 and is targeting double-digit VNB growth again, the research house noted.
Pre-sales for the 2020 opening campaign has started from October and demand for insurance savings has been solid even with a lower guaranteed rate (3.5% versus 4% in 1Q), laying a good foundation for 2020 and gaining the sales force more time to focus on higher-margin products next year.
China Life believes that over the medium term, mass agency model remains a suitable strategy, especially in lower-tier cities, and as such it will continue to seek to expand the sales force (1.95mn as end of 3Q).
Morgan maintained its "equal-weight" rating on the stock, with a target price of HK$22.
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