UBS: Mainland insurance industry favors Ping An of China (02318) with a target price of HK$70 and the new policy will help boost market sentiment

The Zhitong Finance App learned that UBS released a research report stating that it reaffirmed that Ping An of China (02318) is the insurance industry's first choice, with a “buy” rating, with a target price of HK$70. It believes that its risk return is attractive. Due to the significant acceleration of the Group's operating profit growth in the fourth quarter, the expected dividend rates for 2025 and 26 are relatively high, reaching 4.9% and 5.1%, respectively, and that the dividend policy is clear. Furthermore, the Group may be the main beneficiary of the solvency relaxation notice.

The mainland insurance sector recently strengthened, as the China Financial Supervisory Authority issued the “Notice on Adjusting Risk Factors Related to Insurance Companies' Businesses”, which strengthened the policy orientation of encouraging long-term patient capital, which helped boost market sentiment. Furthermore, the yield on Chinese treasury bonds has recently risen, and the yield curve is getting steeper. In the long run, it is beneficial to insurance companies, especially life insurance companies, because it brings higher returns on reinvestment and has a positive impact on embedded value and solvency. Furthermore, the bank anticipates that some insurance companies have reached their annual targets, so the focus is on preparing for a good start next year's sales performance. However, macroeconomic uncertainty continues, and demand for savings is still strong. In addition, some banks have raised the minimum purchase threshold for three-year time deposits, all of which have brought significant benefits to insurance sales, especially banking insurance channels.