20250603-招银国际-众安在线-06060.HK-HK_Stablecoins_outlook_opens_up_the_headroom_for_valuation_re-rating__uplift_TP_to_HK_20.4_9页_1mb

ZhongAn (6060 HK) Summary

Core Content

ZhongAn, a Hong Kong-listed company, has seen its share price surge by 55% in the week of 26 May 2025, driven by positive sentiment from the passage of the Stablecoins Bill by the HK LegCo and the advancement of the GENIUS Act in the US Senate. This has opened up valuation headroom and initiated a re-rating of the company's value. The report maintains a BUY rating with a new 12-month target price of HK$20.4, implying a 1.29x FY25E P/B multiple.

Main Points

• Stablecoin Momentum: The HK Stablecoins Ordinance is expected to take effect in 2025, which could benefit the first batch of HKMA stablecoin issuer sandbox participants. ZhongAn Online, which holds 8.7% in RD Technologies, is considered a key beneficiary of this trend.
• ZA Bank's Position: As a key stakeholder in RD Technologies, ZA Bank can offer custody services for stablecoins and benefit from potential statutory reserve inflows. The bank is poised to benefit from the stablecoin boom, with potential growth in net interest income and a revised target P/B multiple of 2.3x.
• Insurance Growth: ZhongAn's insurance segment is expected to outperform, with a 12.7% YoY increase in total premiums for the first four months of FY25. The growth is supported by health and auto insurance, and the company has actively scaled down low-margin businesses.
• Valuation Update: The company's stock is currently trading at 1.3x FY25E P/B, which is a 26% premium above its 3-year historical average. The new target price based on SOTP is HK$20.4, indicating a potential re-rating of the company's value.
• EPS Forecasts: The report has raised FY25-27E EPS forecasts to RMB 0.69/0.79/0.93 (previous: RMB 0.63/0.74/0.87).
• Financial Performance: The company's insurance revenue is projected to grow from RMB 36.46bn in FY25E to RMB 44.64bn in FY27E, with a revised combined ratio to 96.9% for FY25E, reflecting improved product mix and cost efficiency.
• Stock Data: The company has a market cap of HK$28,308.6 million and a 12-month forward target price of HK$20.4. It is currently trading at HK$19.26, with a 5.9% upside.

Key Information

• Shareholding Structure: Ant Group Co., Ltd. and Ping An Insurance Group each hold 10.7% and 10.6%, respectively.
• Valuation Methodology: The valuation is based on Sum-of-the-Parts (SOTP) and includes estimates for insurance, technology, and banking segments.
• Risk Factors: The report highlights risks such as heightened market fluctuations in stablecoins and cryptocurrencies, slower execution of licensed stablecoin issuers, prolonged low interest rate environment, and increased equity market volatility.

Peer Comparison

The report compares ZhongAn with global digital banks and estimates the target P/B multiple for ZA Bank at 2.3x, which is higher than the previous estimate of 1.12x. The average P/B multiple for global peers is 2.3x for FY25E, indicating a more favorable valuation environment.

Conclusion

ZhongAn is expected to benefit from the growing stablecoin market in Hong Kong, with potential for topline growth and improved margins. The report recommends maintaining a BUY rating, citing the company's strategic position and the positive outlook for its insurance and banking segments.