Zhi Tong Cai Jing·2025-10-21 01:30Group 1 - Core viewpoint: Morgan Stanley reports that China Life (601628)(02628) has issued a strong profit forecast for the first nine months of 2025, with net profit expected to be between 156.8 billion to 177.7 billion RMB, representing a year-on-year growth of 50% to 70% according to ASBE [1] - Market reaction: Morgan Stanley anticipates a positive market response to this announcement, especially since the profit forecast was released just 10 days before the earnings report [1] - Rating and target price: Morgan Stanley maintains an "overweight" rating, citing continued upside potential in fundamentals, including expected dividend increases, faster growth in liability reserves, and government policy support, with a target price of 31 HKD based on an 8x P/E ratio for FY2026 [1] Group 2 - Dividend expectations: Morgan Stanley identifies potential for an increase in the consensus dividend per share for FY2025 to 0.7 RMB, which represents a year-on-year growth of 7.9% and equates to approximately a 4% yield [2] - Capital management: China Life is one of the few insurance companies that has not fully adopted market value-based solvency calculations, indicating potential for a share buyback given its strong earnings and solid capital position [2] - Demand for life insurance: There is strong demand for risk-free asset life insurance policies, supported by enhanced distribution channels, which is expected to accelerate the growth of liability reserves and improve insurance profitability [2]