Core Viewpoint - The Hong Kong stock market is experiencing a slow bull market in 2025, with the Hang Seng Index rising over 30% year-to-date as of September 11, 2025, and various sectors like new consumption, innovative pharmaceuticals, and hard technology gaining investor attention [1][3]. Group 1: Financial Performance - China Reinsurance reported total premium income of 103.835 billion yuan in the first half of 2025, a year-on-year increase of 3.4%, and net profit attributable to shareholders of 6.244 billion yuan, up 9% [4]. - The company's net assets grew by 3.7% year-on-year, reaching 116.781 billion yuan [4]. - The property reinsurance business maintained profitability, with a comprehensive cost ratio of 95.83%, despite a 1.29 percentage point increase due to prior year losses [5]. Group 2: Business Structure Optimization - The company is focusing on "structural optimization, innovation-driven, and strategic focus," balancing short-term operational efficiency with long-term value creation [7]. - Emerging business areas, such as construction quality defect insurance and agricultural index insurance, generated premium income of 2.249 billion yuan, a 31.6% increase [8]. Group 3: Investment Performance - Total investment assets grew by 1.1% to 448.877 billion yuan, with total investment income of 9.584 billion yuan and net investment income increasing by 4.9% to 7.321 billion yuan [6]. - The company achieved a stock investment return that outperformed the market benchmark by over 900 basis points [6]. Group 4: Future Outlook - China Reinsurance is expected to continue releasing growth potential through product innovation and global expansion, alongside industry valuation recovery opportunities [13].

Investment Rating - The report initiates coverage on China Reinsurance Group with an "Overweight" rating, highlighting its dominant position in the Chinese reinsurance market with a projected market share of nearly 50% in 2024 [1][9][14]. Core Insights - China Reinsurance Group is positioned as a benchmark in the Chinese reinsurance industry, benefiting from unique product offerings that help alleviate capital pressure on life insurance companies. The company is expected to experience growth rates higher than direct insurance companies throughout economic cycles [1][9][14]. - The demand for financial reinsurance contracts is anticipated to increase due to macroeconomic pressures, particularly from life insurance companies facing solvency challenges. This positions China Re as a critical player in the market [1][4][29]. - The company has a significant overseas business exposure, contributing approximately 15% to its total premium income, which helps diversify business risks and provides foreign exchange hedging benefits [1][4][14]. Summary by Sections Investment Rationale - The overall reinsurance industry in China is projected to see a rise in gross written premiums (GWP) to RMB 228 billion in 2024, with China Re holding a market share of about 50% [13][14]. - The report emphasizes the company's unique business model and its ability to maintain lower volatility in underwriting performance compared to direct insurers, which typically experience more significant fluctuations [13][14]. Financial Performance - China Re's consolidated GWP is expected to reach approximately RMB 178 billion (USD 25 billion) in 2024, with a five-year compound annual growth rate (CAGR) of 4.2% from 2019 to 2024 [13][14]. - The report forecasts a net profit growth of 87% for 2024, driven by strong underwriting performance and favorable investment results [38]. Valuation - The report employs a price-to-earnings (P/E) valuation method, suggesting a target price of HKD 1.40 by December 2025, based on a P/E ratio of 5 times the expected earnings for fiscal year 2025 [9][14][23]. - The valuation is considered conservative compared to the average P/E ratios of 6-8 times for global reinsurance peers, reflecting China Re's market dominance and growth potential [9][14][23]. Overseas Business Strategy - The acquisition of Bridge Insurance in 2018 has significantly enhanced China Re's overseas business, with this segment now contributing 15% to total premium income, up from 3% in 2018 [46][48]. - The report highlights the advantages of having a diversified overseas business, including risk mitigation from regional catastrophes and improved asset-liability management [46][48].