China Insurance

Research evidence excerpt

China Insurance

isappointments, or a wide outbreak of infectious disease such as Covid-19. Upside risks that could

push the stock above our target price include a strong equity market rally, rising bond yields, a smoother-than-expected

management transition, a better-than-expected earnings/NBV, and a stronger-than-expected economy.

China Taiping Insurance

(0966.HK; HK$19.75; 2; 03 Jul 26; 16:10)

Valuation

We derive our HK$24.5 target price using a sum-of-the-parts (SOTP) valuation approach incorporating: (1) A three-stage

growth model to project NBV (first-stage growth of 9% (3 years, 2025-2028E), second-stage growth of 5.0% and terminal

growth of 2.0%); (2) P/B multiples approach to value P&C insurance at 1.0x, and reinsurance business at 0.5x at a discount to

PICC’s 1.3x multiple as a smaller player; (3) 0.5x book value for other operations at a discount to core life operations; and (4) a

15% holding company discount. Our target price implies 0.4x 2026E P/EV.

Risks

The key downside risks to our target price for CTIH include a continuous drop in bond yield, sharp A-share market correction,

earnings/NBV disappointments, slower than expected life business recovery, less effective strategy execution due to

management changes, expansion slowdown, and a severe catastrophe impact on the P&C and reinsurance businesses.

New China Life

(601336.SS; Rmb63.52; 2; 03 Jul 26; 15:00)

We derive our target price of Rmb67.8 for New China Life-A by using an Appraisal Value approach, which combines the

embedded value (EV) with new business value (NBV). In turn, we use a three-stage growth model to project NBV. Key

assumptions include a first-stage growth of 6% (three years, 2025-2028E), second-stage growth of 5.0% and terminal growth

of 2.0%.