CHINA TAIPING-中国太平：FY24 NBV outshined; resume coverage with BUY-20250326

Investment Rating - The report resumes coverage of China Taiping with a "BUY" rating and a target price (TP) of HK $15, indicating a potential upside of 28.9% from the current price of HK$ 11.64 [1][2]. Core Insights - China Taiping reported a robust net profit increase of 36.2% year-on-year (YoY) to HK $8.43 billion, although this was 10% to 11% lower than the analyst's and Bloomberg consensus estimates. The increase in income tax charges, which rose approximately six-fold YoY, was a significant factor in this discrepancy [1]. - The new business value (NBV) surged 90% YoY to HK$ 14.3 billion on a like-for-like basis, driven by strong growth in agency and bancassurance channels, which saw increases of 42% and 400% YoY, respectively [7]. - The report highlights a significant margin expansion across major channels, with the total NBV margin increasing by 17 percentage points YoY to 32.5% in FY24 [1][7]. - The combined ratio for the property and casualty (P&C) segment improved to 98.1%, supporting a remarkable 831% YoY increase in net profit for domestic P&C to HK $804 million [1][7]. - The report projects FY25 NBV to rise by 11% YoY, supported by an improved product mix and solid financial performance [1][7]. Financial Performance Summary - For FY24, net profit is projected at HK$ 12.8 billion, with an expected increase to HK $14.5 billion in FY25 and HK$ 16.3 billion in FY26 [8]. - The report indicates a dividend per share (DPS) of HK $0.35 for FY24, reflecting a 16.7% YoY increase, although the payout ratio decreased to 16.9% from 20.1% in FY23 [1][8]. - The return on equity (ROE) is expected to improve from 11.2% in FY24 to 12.9% in FY25, indicating enhanced profitability [8][17]. Valuation Methodology - The valuation is based on a sum-of-the-parts (SOTP) approach, considering various segments including life insurance, domestic and overseas P&C, reinsurance, and asset management [9][12]. - The total fair value of the company is estimated at HK$ 49.7 billion, leading to a target price of HK$15.0 per share after applying a 10% conglomerate discount [13][14].