Core Viewpoint - China Ping An's 2025 mid-year report shows mixed results with revenue and net profit declining, while operating profit and new business value in life insurance demonstrate growth, indicating resilience in core operations despite challenges in investment returns [1][2][3] Financial Performance - Revenue and net profit for the first half of 2025 reached CNY 500.1 billion and CNY 68 billion, reflecting year-on-year changes of +1.0% and -8.8% respectively [1] - Operating profit after tax (OPAT) increased by 3.7% to CNY 77.7 billion, while net assets rose by 1.7% to CNY 944 billion [1] - The non-annualized comprehensive investment return improved by 0.3 percentage points to 3.1% [1] Business Segment Analysis - Life insurance, property and casualty insurance, banking, asset management, and financial empowerment segments showed OPAT growth rates of 2.5%, 1.0%, -3.9%, 110%, and 179% respectively, with life insurance remaining the core business [2] - The improvement in property and casualty insurance profits was attributed to a 2.6 percentage point reduction in the combined ratio, primarily from enhancements in auto and guarantee insurance [2] - The asset management segment's net profit increased by CNY 1.43 billion, mainly due to a reduction in financial expenses [2] - The technology segment reported a net loss of CNY 2.6 billion, largely due to a one-time loss from the consolidation of Good Doctor [2] Life Insurance Insights - Life insurance's new business value (NBV) grew significantly, driven by a 149% increase in new policies through the bancassurance channel, achieving a high margin of 28.6% [2] - The number of agents and activity rates in the individual insurance channel continued to decline, with a 6 percentage point drop in activity rates to 49.9% [2] - The NBV's Contractual Service Margin (CSM) showed a 6.2% increase, with expectations for positive growth by year-end [2] Investment Performance - Investment returns for life insurance remained below the annualized 4% target, with property and casualty insurance net profit only increasing by 1% despite a 126% rise in underwriting profit due to a 30.2% drop in investment income [2] - Asset allocation shifted, with bond holdings in TPL accounts decreasing from 16.9% to 15.2%, while equity assets increased significantly [2] - The comprehensive investment return rose by 24.5%, with non-annualized returns improving to 3.1% [2] Profit Forecast - The company’s mid-year report aligns with expectations, particularly with the stabilization of life insurance CSM, suggesting potential for improved profitability [3] - Forecasted net profits for 2025-2027 are CNY 130.6 billion, CNY 148 billion, and CNY 173.2 billion, with respective growth rates of 3.2%, 13.3%, and 17.0% [3] - The estimated embedded value per share for 2025-2027 is projected at CNY 85.1, CNY 91.1, and CNY 97.8, with current price-to-embedded value ratios of 0.68, 0.63, and 0.59 [3]

Investment Rating - The investment rating for the company is "Buy" [7][5]. Core Views - The company reported a strong growth in New Business Value (NBV) of 32% year-on-year, driven primarily by the bancassurance channel, which saw a 156% increase in NBV [2][5]. - The operating profit after tax (OPAT) increased by 7.1% year-on-year, with life insurance operating profit growing by 5% [1][5]. - The combined operating ratio (COR) for property insurance improved, decreasing by 0.8 percentage points to 96.3%, mainly due to a reduction in expense ratios [1][3]. Summary by Sections Life Insurance - The NBV for life insurance increased by 32% year-on-year, with new single premium income rising approximately 29% [2]. - The bancassurance channel significantly contributed to this growth, while the agent channel experienced a decline in new single premium income [2]. - The profit from life insurance grew by 3.2% year-on-year, supported by improved investment returns [2]. Property Insurance - Property insurance premiums grew by 0.9% year-on-year, with a focus on reducing high COR business [3]. - The COR for property insurance improved to 96.4%, with a notable decrease in expense ratios [3]. - The company anticipates a low single-digit growth rate of 3% for property insurance premiums in 2025 [3]. Investment Performance - The total investment return rate for the first half of 2025 was 2.3%, a decrease of 40 basis points year-on-year [4]. - The net investment return rate was 1.7%, down 10 basis points from the previous year [4]. - The company's asset allocation saw a slight increase in equity investments, while bond investments decreased [4]. Profit Forecast and Valuation - The EPS forecast for 2025 has been adjusted to RMB 4.88, reflecting a slight increase in expectations for life insurance NBV growth and property insurance performance [5]. - The target price for A/H shares has been raised to RMB 47/HKD 42, maintaining the "Buy" rating [5][7]. - The company is expected to maintain a steady growth trajectory in both life and property insurance segments, with a projected EPS growth rate of 30% for NBV in 2025 [2][5].

Core Viewpoint - The company maintains a "Buy" rating with a target price of HKD 89.80 per share, reflecting a 1.7x P/EV for 2025, supported by stable growth in NBV and EV, and an expected improvement in shareholder returns [1] Group 1: Financial Performance - In H1 2025, the company achieved a net profit attributable to shareholders of USD 2.534 billion, a decrease of 24% year-on-year; however, the after-tax operating profit was USD 3.609 billion, representing a 6% increase [1] - The embedded value (EV) stood at USD 70.853 billion, up 2.6% from the end of the previous year, with a 4.2% contribution from new business value growth and a 4.2% contribution from stable expected returns [1] - The interim dividend for 2025 was set at HKD 0.49 per share, reflecting a 10% year-on-year increase [1] Group 2: New Business Value (NBV) Growth - The company reported a 14% year-on-year increase in NBV for H1 2025, with annualized new premiums rising by 8% and the value ratio improving by 3.4 percentage points to 57.7% [2] - In Hong Kong, NBV grew by 24%, driven by a 35% increase in agent channel NBV due to a 9% growth in active agents and a 30% increase in productivity [2] - In mainland China, NBV decreased by 4%, but if excluding the impact of economic assumptions, it would have increased by 10% [2] Group 3: Shareholder Returns - The operating profit after tax (OPAT) grew steadily, with a 6% increase in H1 2025, primarily due to stable CSM release and positive contributions from operational differences and risk adjustments [3] - The diluted after-tax operating profit per share was USD 0.3391, a 12% increase year-on-year, with the return on equity for shareholders rising by 0.9 percentage points to 16.2% [3] - The company completed a USD 1.6 billion share buyback on July 14, 2025, and returned USD 3.71 billion to shareholders through dividends and buybacks in H1 2025, with free surplus at USD 9.898 billion [3]

Investment Rating - The report maintains a "Buy" rating for the company [6][5]. Core Insights - The company reported a strong growth in earnings per share (EPS) of RMB 4.67, a 65% year-on-year increase, slightly above the expected RMB 4.61, driven primarily by favorable investment returns [1]. - The total investment return rate for 2024 is 5.6%, up 3 percentage points year-on-year, contributing to significant net profit growth [1]. - The operating profit after tax (OPAT) for the life insurance segment increased by 6% year-on-year, indicating a faster growth rate compared to the first half of 2024 [4]. - The new business value (NBV) for life insurance saw a remarkable increase of 58% year-on-year, with expectations for continued growth [2][1]. Summary by Sections Life Insurance - The NBV for 2024 increased by 58% year-on-year, primarily due to a significant rise in NBV profit margins, despite a slight decline in new policies [2]. - The NBV profit margin is estimated to rise to 21.4% from 13% in 2023, driven by pricing rate adjustments and reduced channel sales expenses [2]. - The company has adjusted its investment return assumptions down to 4.0% from 4.5%, and the discount rate to 8.5% from 9.0%, which led to a 23% decrease in NBV [2]. Property Insurance - The combined operating ratio (COR) for property insurance increased by 0.9 percentage points to 98.6%, mainly due to higher claims from natural disasters [3]. - The claims ratio rose by 1.7 percentage points to 70.8%, partially offset by a decrease in expense ratio [3]. - Total premiums for property insurance grew by 6.8%, with a 3.7% increase in auto insurance and a 10.7% increase in non-auto insurance [3]. Profit Forecast and Valuation - The report has revised the EPS forecasts for 2025, 2026, and 2027 to RMB 4.74, RMB 4.79, and RMB 5.23 respectively, reflecting increases of 23% and 14% [5]. - The target price based on discounted cash flow (DCF) valuation is set at RMB 43 for A-shares and HKD 33 for H-shares, maintaining the "Buy" rating [5][6].