PING AN OF CHINA(SH:601318) Ge Long Hui·2025-12-15 12:40Core Viewpoint - The insurance sector has experienced a valuation recovery since December 2025, with strong performance from major companies like China Ping An, which reached a nearly four-year high [1]. Group 1: Market Performance - On December 15, 2025, the insurance sector saw a significant rise, with the Wind Insurance Index increasing by 4.31%, and all constituent stocks rising collectively [1]. - China Ping An led the gains with an A-share increase of 4.96% and an H-share increase of 2.9% [1]. - Other notable performers included China Pacific Insurance (3.50%), China Life Insurance (1.57%), and New China Life Insurance (2.60%) [2]. Group 2: Institutional Support - Institutional investors are optimistic about the sector, with Morgan Stanley reiterating an "overweight" rating for Ping An and raising its target price from HKD 70 to HKD 89 [2]. - CICC expects Ping An to lead the next round of valuation recovery, adjusting its target prices for A-shares and H-shares to CNY 89.8 and HKD 99.4, respectively [2]. - UBS has also reaffirmed Ping An as a top pick in the industry with a "buy" rating [2]. Group 3: Industry Trends - The insurance industry's "valuation repair window" has opened, with 2025 being a pivotal year for accelerated recovery and high-quality development [6][7]. - The growth in residents' financial assets and demographic changes are expected to drive long-term growth in the insurance sector, with a projected annual growth rate of 8% from 2024 to 2030, reaching CNY 440 trillion by 2030 [7]. - The aging population and rising healthcare costs indicate a significant demand for insurance products, particularly in the high-end medical services market [7]. Group 4: Policy Support - Recent regulatory changes have optimized the operating environment for insurance companies, reducing capital requirements and enhancing asset allocation efficiency [10]. - The adjustment of risk factors for long-term holdings is expected to release approximately CNY 198 billion in minimum capital, potentially leading to an additional CNY 726 billion in funds for the industry [10]. Group 5: China Ping An's Competitive Advantage - China Ping An is positioned as a leader in the recovery due to its "comprehensive finance + healthcare and elderly care" model, which provides a competitive edge in the market [11][12]. - The company has built a robust customer base, with nearly 250 million personal customers and a high retention rate for clients holding multiple contracts [14]. - Ping An's healthcare and elderly care services have expanded significantly, covering 85 cities and serving nearly 240,000 clients [18]. Group 6: Financial Performance - As of September 2025, Ping An's investment portfolio exceeded CNY 6.41 trillion, with a non-annualized comprehensive investment return of 5.4%, up 1.0 percentage points year-on-year [21]. - The company has strategically increased its equity allocation in response to market conditions, enhancing its return potential while maintaining stability [21]. Group 7: Conclusion - The rise of China Ping An and its new highs reflect both industry beta benefits and the company's alpha advantages, driven by demographic demands and regulatory support [24]. - The insurance sector is transitioning towards high-quality development, with Ping An's unique competitive barriers aligning well with industry trends, leading to increased institutional confidence in its growth potential [24].