PING AN(2318.HK)：BANCA FUELLING NBV GROWTH IN JUMPSTART SALES; 4Q EARNINGS COULD EASE ON GROWTH STOCK CORRECTIONS

Core Viewpoint - Ping An is maintained as a top pick in the sector with a target price raised to HK$90 based on SOTP valuation, reflecting adjustments in FY26E forecasts and net earnings growth estimates for FY25-27E [1] Group OPAT and NPAT Forecasts - Group OPAT is estimated to grow by 12% YoY in FY25E to RMB136 billion, with a significant acceleration of approximately 46% YoY in 4Q25 [1] - Group NPAT is forecasted to increase by 5.1% YoY in FY25E to RMB133 billion, although non-operating items may decline in 4Q due to weaker equity market performance and rising bond yields [1] Bancassurance Growth - Bancassurance is expected to drive FY26E NBV growth by 18%, with Ping An expanding its proprietary channels and increasing outlet penetration [2] - The insurer's total outlets in China are around 200,000, with a significant portion potentially catering to high-net-worth clients, indicating room for further expansion [2] Investment Strategy and Market Exposure - Ping An increased its exposure to growth stocks in 3Q25, with total equity exposure reaching 18.3% of total investment assets by 1H25, which is expected to grow further [3] - The investment contribution to net earnings in 4Q25 is anticipated to be weaker due to corrections in growth stocks, as indicated by the performance of relevant indices [3] Target Price and Valuation - The target price of HK$90 is derived using a SOTP valuation approach, with specific multipliers applied to different segments of the business, including life insurance and asset management [3] - The new target price implies a valuation of 0.9x FY26E P/EV and 1.24x FY26E P/B, reflecting the company's strong position in the life insurance sector [3]