Goldman Sachs·2025-06-23 02:09Investment Rating - The report assigns a Neutral rating to China Pacific Insurance (CPIC) with a 12-month price target of HK$23.50 for H-shares and Rmb26.50 for A-shares, indicating a downside of 6.0% and 24.0% respectively [9][13]. Core Insights - Strong sales momentum has been observed in the first quarter of FY25, continuing into the second quarter, with the mix of participating product sales increasing to over 30% by the end of May, compared to approximately 20% in 1Q25 [5]. - CPIC's agency headcount has stabilized year-to-date, with plans to increase recruitment starting in the second half of FY24, focusing on improving agent productivity [5]. - The bancassurance channel has shown strong growth in value of new business (VONB) for FY24, with expectations of similar momentum in FY25, particularly in tier 1-2 cities [5]. - Investment in equity and funds remains stable at around 12% of total investment assets, with a new money yield of approximately 2.5% [12]. Sales Momentum - The sales momentum in 1Q25 has continued into 2Q25, with a notable increase in the sales mix of participating products [5]. - The agency channel aims to promote health and protection products to improve margins and diversify the product mix [5]. - The bancassurance channel strategy focuses on tier 1-2 cities to access mid-to-high-end customers, maintaining key partnerships with banks [5]. Asset and Liability Management - CPIC's current effective duration gap is 3-4 years, with an asset duration of 11.6 years [12]. - The blended guaranteed cost of liability is around 2.8%, expected to be lower than 2.5% when including positive expense and risk margins [12]. Shareholders' Return - CPIC will maintain its annual payout policy and has not proposed a detailed plan for share buybacks, despite receiving authorization from the AGM [12]. - The company emphasizes total payout ratio over more frequent dividend payments, indicating a focus on long-term shareholder returns [12].