HTSC·2026-03-26 02:58Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of HKD 26.00 [1][10][12]. Core Insights - The company reported a significant increase in net profit for 2025, reaching HKD 27.059 billion, which represents a year-on-year growth of 220.93%, driven by improved investment performance and a reversal in tax rates [6]. - The net investment performance saw a remarkable increase of 150% to HKD 14.583 billion, although the total investment yield decreased by 53 basis points to 4.04% [6]. - The new business value (NBV) for life insurance grew by 5%, indicating stable performance, with expectations for a 16% growth in 2026 [7]. - The property insurance segment showed stable underwriting performance, with a combined ratio (COR) of 98.8%, an improvement of 1.3 percentage points year-on-year [8]. - The solvency ratio for the life insurance segment decreased to 230%, down 68 percentage points year-on-year, but remains adequate [9]. Financial Projections - Gross premium income is projected to grow from HKD 112.267 billion in 2025 to HKD 131.032 billion by 2028, with a compound annual growth rate (CAGR) of approximately 4.77% [5]. - Total investment income is expected to fluctuate, with a forecast of HKD 59.723 billion in 2026, down from HKD 64.989 billion in 2025, before recovering to HKD 67.402 billion by 2028 [5]. - Earnings per share (EPS) is projected to decrease from HKD 7.25 in 2025 to HKD 4.11 in 2026, before gradually increasing to HKD 4.27 by 2028 [5][10]. - The dividend per share (DPS) is expected to be HKD 0.82 in 2026, down from HKD 1.23 in 2025, reflecting a dividend yield of 3.88% [5][10]. Valuation Methodology - The valuation of the company is based on a sum-of-the-parts (SOTP) approach, utilizing both embedded value and book value methods, with a target price derived from an average of HKD 34 (embedded value) and HKD 18 (book value) [10][13].