2025-10-16 13:07Summary of New China Life (1336.HK) Profit Alert Conference Call Company Overview - Company: New China Life Insurance Co., Ltd. (NCI) - Ticker: 1336.HK Key Financial Highlights - 9M25E Net Profits: Estimated to increase by 45% to 65% year-on-year to Rmb30.0 billion to Rmb34.1 billion compared to Rmb14.8 billion in 1H25, which represents a 34% year-on-year growth [1][2] - 3Q25E Net Profits: Expected to range from Rmb15.2 billion to Rmb19.3 billion, reflecting a 58% to 101% year-on-year growth [2][4] Core Drivers of Performance - Investment Returns: The significant increase in net profits is attributed to substantial year-on-year growth in investment returns, despite a high base effect. This growth is supported by the strong performance of China's capital market in 9M25 and NCI's strategic allocation to high-quality anchor assets [3][4] Valuation and Market Position - Target Price: The target price for NCI is set at HK$50.70, implying an expected share price return of 8.8% and an expected dividend yield of 4.8%, leading to a total expected return of 13.6% [5][7] - Market Capitalization: Approximately HK$145.37 billion (or US$18.68 billion) [5] Growth Projections - Embedded Value (EV) and New Business Value (NBV): The target price is derived using an Appraisal Value approach, combining EV with NBV. Key assumptions include: - First-stage growth of 18% from 2024 to 2027 - Second-stage growth of 5% - Terminal growth of 2% [7] Risks and Opportunities - Downside Risks: Potential risks include sharp corrections in the A-share market, macroeconomic slowdown in China, stricter regulations on insurance agents, falling bond yields, management changes, and increased competition [8] - Upside Risks: Opportunities may arise from stimulus policies, macro recovery, A-share market rebounds, and regulatory relaxations on bancassurance sales [8] Conclusion - New China Life is positioned for significant profit growth in 9M25 and 3Q25, driven by strong investment returns and strategic asset allocation. The company faces both risks and opportunities that could impact its future performance and stock price.