UBS: China Life Insurance (02628)'s interim results far exceeded expectations and reaffirmed the “buy” rating

The Zhitong Finance App learned that UBS released a research report stating that it will raise China Life's (02628) 2026 net profit forecast by 37% to reflect the profit forecast for the first half of the year and the macro environment for the second half of the year to date. UBS reiterated its “buy” rating for China Life, and the target price for H shares remained unchanged at HK$40.

UBS said that the 2026 interim results forecast released by China Life far exceeded expectations. Net profit for the first half of the year is expected to increase by 215% to 235% year on year to 129 billion to 137 billion yuan (same below), exceeding buyers' expectations and the market forecast of 126 billion yuan for the full year. According to the bank, China Life Insurance's net profit for the second quarter increased 8 to 8.7 times year-on-year to 109 billion to 118 billion yuan, mainly driven by strong growth in investment income and improved insurance service performance.

However, China Life's new business value (VNB) momentum has cooled down in the second quarter. UBS estimates that its new business value increased 33% year over year in the first half of the year, which is slower than 76% growth in the first quarter. This is mainly due to the high base effect due to the extended sales momentum in the same period last year, the early sale of long-term products in the first quarter of this year, and the tightening of regulations on consistent commission requirements for banking insurance channels in the second quarter. Although the value growth of new business in the third quarter may slow further due to new regulations and a high base, the bank expects China Life Insurance to achieve double-digit growth in new business value throughout the year.