PICC(SH:601319) Soochow Securities·2025-04-08 08:23Investment Rating - The report maintains a "Buy" rating for China Pacific Insurance (601319) [2][3] Core Views - The report anticipates significant improvement in the underwriting side of the property insurance business in Q1 2025, with positive growth in life insurance and investment performance, supporting both short-term earnings release and long-term growth momentum [2][3] Summary by Relevant Sections Property Insurance - It is expected that the underwriting profit will significantly increase in Q1 2025 due to fewer major disasters and ongoing cost reduction efforts by the company. The report highlights that in the first two months of 2025, natural disasters caused only 355,000 people to be affected with direct economic losses of approximately 9.33 billion, compared to 8.809 million affected and 20.69 billion in losses during the same period in 2024. The comprehensive cost ratio for China Pacific Insurance in Q1 2024 increased by 2.2 percentage points to 97.9% due to these disasters. The report predicts a notable decrease in major disaster losses in Q1 2025, benefiting the property insurance companies by reducing payout expenses [3] - The company has been optimizing its business structure and expanding its market share in personal non-vehicle insurance, which is expected to continue to yield positive results. The comprehensive cost ratio is projected to improve significantly in Q1 2025, with the company aiming for a combined cost ratio of 96% for auto insurance and 99% for non-auto insurance [3] - The average comprehensive cost ratio over the past three years has been 97.6%, indicating strong cost management capabilities and a leading position in underwriting profitability within the industry [3] Life Insurance - The report suggests that the improvement in value rates will be the main driver for new business value (NBV) growth, despite potential short-term pressure on new single premium growth. The company’s health insurance business is expected to maintain stable growth [3] Investment Performance - The report forecasts good performance in equity investments, with the Shanghai Composite Index and CSI 300 Index showing slight declines of -1.2% and -0.5% respectively in Q1 2025, which is weaker than the same period in 2024. However, the structural market conditions favoring growth are expected to enhance the company's fund holdings returns. The Hang Seng Index's increase of 15.3% is also anticipated to positively impact investment returns [3] Earnings Forecast and Valuation - The report maintains previous earnings forecasts, projecting net profit attributable to shareholders for 2025-2027 to be 46.1 billion, 51.1 billion, and 57.4 billion respectively. The current market capitalization corresponds to a price-to-book (PB) ratio of 1.0x for 2025E. The report emphasizes the company's brand effect and cost control advantages, which are expected to continue optimizing the business structure and driving cost reductions [3][10]