1、 Employed by a non-US affiliate of MLPF there could be potential room for earnings revision. EV and VNB solid growth China Lifes EV grew by 18.8% YoY and with operational EV (core EV without MTM gains or investment variance) grew by 12.8% YoY. Figure 4: China Life embedded value data (RMBm) FY08 FY0
2、9 % chg BofAML comments Value of in force 122,898 149,387 21.6 Strong expected return and VNB groth Cost of solvency (20,626) (24,106) 16.9 Increased owing to saw of protection products Adjusted net asset 137,816 159,948 16.1 MTM gains on investments Embedded value 240,088 285,229 18.8 VNB 13,924 17
3、,713 27.2 Strong product mix restructuring Source: BofAML Figure 5: China Life FY09 EV movement (RMBm) 285,229 (757) (6,500) (28) (4,283) (1,155) 19,590(560) 17,71321,123240,087EV as at 31Dec 2008Ex pectedreturn on EVVNB in theperiodOperatingex periencevarianceInv estmentex periencev arianceMethodol
4、ogy ,model andassumptionchangesMarket valueadjustmentEx changegains orlossesShareholderdiv idenddistributionOther EV as at 31Dec 2009Source: BofAML, company data CR China Life Insurance Co-H 08 April 2010 6 The EV and VNB are in line with expectations. Market has already expected insurers EV to see
5、strong growth owing to MTM gains on equity investments. For China Life, the company has been guiding for 20+% VNB growths, and therefore, the 27.2% growth should be in line with expectations. As China Life did not provide the breakdown of FYP for FY09, it is hard to gauge the new business margins tr
6、end. Nonetheless, given that premium only increased by 3.9% and regular premium 2 - Neutral stocks are expected to remain flat or increase in value and are less attractive than Buy rated stocks and 3 - Underperform stocks are the least attractive stocks in a coverage cluster. Analysts assign investm
7、ent ratings considering, among other things, the 0-12 month total return expectation for a stock and the firms guidelines for ratings dispersions (shown in the table below). The current price objective for a stock should be referenced to better understand the total return expectation at any given ti
8、me. The price objective reflects the analysts view of the potential price appreciation (depreciation). Investment rating Total return expectation (within 12-month period of date of initial rating) Ratings dispersion guidelines for coverage cluster* Buy 10% 70% Neutral 0% 30% Underperform N/A 20% * R
9、atings dispersions may vary from time to time where BofAML Research believes it better reflects the investment prospects of stocks in a Coverage Cluster. INCOME RATINGS, indicators of potential cash dividends, are: 7 - same/higher (dividend considered to be secure), 8 - same/lower (dividend not cons
10、idered to be secure) and 9 - pays no cash dividend. Coverage Cluster is comprised of stocks covered by a single analyst or two or more analysts sharing a common industry, sector, region or other classification(s). A stocks coverage cluster is included in the most recent BofAML Comment referencing th
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24、er financial instrument or any derivative related to such securities or instruments (e.g., options, futures, warrants, and contracts for differences). This report is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial sit
25、uation and the particular needs of any specific person. Investors should seek financial advice regarding the appropriateness of investing in financial instruments and implementing investment strategies discussed or recommended in this report and should understand that statements regarding future pro
26、spects may not be realized. Any decision to purchase or subscribe for securities in any offering must be based solely on existing public information on such security or the information in the prospectus or other offering document issued in connection with such offering, and not on this report. CR Ch
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