Bank of America Securities: Maintaining China Life's (02628) “Buy” rating and profit fluctuations at the target price of HK$29 are affected by investment

The Zhitong Finance App learned that Bank of America Securities released a research report stating that it will maintain China Life's (02628) H share “buy” rating and a target price of HK$29, and maintain the A share (601628.SH) “outperform the market” rating and a target price of RMB 29. The bank expects China Life Insurance's profit for the full year of 2026 to drop 26% year on year, but the company will aim to maintain stable dividends per share. The bank kept its profit forecast and target price unchanged, believing that the company's profit fluctuations were mainly affected by investment performance.

China Life Insurance's net profit for the first nine months of this year was 89.4 billion yuan, down 47% year on year, mainly affected by the high base for the same period last year. In the third quarter, a loss of 45.1 billion yuan was recorded due to a decline in investment income, including fair value losses, which was mainly dragged down by the decline in the mainland stock market, especially growth stocks. Total return on investment (unannualized) for the first nine months was 3.2%, compared to 6.4% in the same period last year; net assets fell 2% quarterly. Excluding short-term market fluctuations, indicators similar to operating profit increased 16% year over year.

In terms of new business, China Life Insurance's new business value increased 13% year over year in the first nine months, better than the year-on-year decline in other major peers, mainly due to strong sales in the first quarter. First-year premiums for agent channels increased 4% year-on-year, while first-year premiums for banking insurance channels decreased 8% year-on-year. The improvement in the profit margin of new business values is also one of the growth drivers, driven by lower guaranteed interest rates and possible declines in agent commissions.

Management said they are confident of a “good start” in sales growth, while Bank of America Securities believes that the key is the recovery of banking insurance channels. In terms of valuation, China Life Insurance's target price of HK$29 is equivalent to 0.8 times the 2026 net market ratio; the target price of A-shares of RMB 29 is equivalent to 1.4 times the predicted net market ratio in 2026.