20260327-招银国际-中国人寿-02628.HK-4Q_net_loss_dragged_by_fair_value_contraction_DPS_rose_31.7_ahead_of_expectations_7页_760kb

China Life (2628 HK) Company Update Summary

Core Content

China Life (2628 HK) reported its FY25 results, highlighting significant growth in net profit and net asset value (NAV), while experiencing a net loss in 4Q25 due to fair value contraction. The company's performance was influenced by turbulent stock and bond markets, leading to investment losses. Despite this, the company maintained a strong financial position with increased investment income and improved insurance service results.

Main Points

• Net Profit and NAV:

  • Net profit for FY25 rose 44.1% YoY to RMB154bn, while 4Q25 recorded a net loss of RMB13.7bn due to fair value losses.
  • Net asset value increased 16.8% YoY to RMB595.2bn, and ROE rose 6.2pct YoY to 27.8%.

• Dividend and Payout Ratio:

  • DPS (Dividend per Share) increased 31.7% YoY to RMB0.86, surpassing expectations.
  • Dividend payout ratio was 15.7% in FY25, slightly lower than FY24's 17.2%.

• New Business Value (VNB):

  • VNB grew 35.7% YoY to RMB45.8bn, driven by agency growth (+25.5% YoY, 86% mix) and Bancassurance & other channels (+1.69x YoY, 14% mix).

• Investment Portfolio:

  • Total investment assets rose 12.3% YoY to RMB7.42tn.
  • The mix of stocks and equity funds increased to 16.9% (from 13.6% in 1H25).
  • FVOCI (Fair Value Through Other Comprehensive Income) stocks increased 66% from 1H25 or 2.86x YoY to RMB232.4bn, while FVTPL (Fair Value Through Profit or Loss) stocks decreased in mix from 88% to 72.2%.

• Valuation and Target Price:

  • The stock is currently trading at 0.4x FY26E P/EV and 0.9x FY26E P/B.
  • The target price was lifted to HK$33 (from HK$31), implying 0.52x FY26E P/EV and 1.17x FY26E P/B.
  • Analysts maintain a BUY rating.

Key Financial Highlights

Strategic Outlook

• The company plans to focus on value stocks with high payout and attractive valuations.
• It aims to scale up exposure to selective growth sectors.
• Management indicated that the effective asset-liability duration gap was <1.5 years, suggesting flexibility in bond allocation if long-term interest rates rise in 2026.

Shareholding and Performance

• Shareholding Structure:

  • Ping An Insurance (Group): 10.1%
  • BlackRock, Inc.: 6.9%

• Share Performance:

  • 12-month absolute return: 17.9%
  • 12-month relative return: 23.9%

• Market Cap: HK$707,755.6 million

Key Risks

• Prolonged low-interest rate environment and potential interest rate shocks.
• Heightened equity market volatility.
• Slower-than-expected new business sales or transitions to participating policy sales.

Analyst Certification and Disclaimer

• The analyst certifies that the views expressed reflect personal opinions and are not influenced by compensation.
• The report is for informational purposes only and not tailored to individual investors.
• There may be material differences between actual outcomes and those predicted.
• CMBIGM is not liable for any losses incurred from reliance on this report.
• The report is intended for the use of the intended recipients only and may not be reproduced or distributed without prior written consent.

CMBIGM Ratings

• BUY: Stock with potential return of over 15% over the next 12 months.
• HOLD: Stock with potential return of +15% to -10% over the next 12 months.
• SELL: Stock with potential loss of over 10% over the next 12 months.
• NOT RATED: Stock not rated by CMBIGM.
• OUTPERFORM: Industry expected to outperform the relevant broad market benchmark.
• MARKET-PERFORM: Industry expected to perform in-line with the relevant broad market benchmark.
• UNDERPERFORM: Industry expected to underperform the relevant broad market benchmark.

Additional Notes

• The report is prepared by CMB International Global Markets Limited, a subsidiary of China Merchants Bank.
• The company is not rated in the U.S. due to lack of registration as a broker-dealer.
• The analyst is not registered or qualified as a research analyst under FINRA rules.
• The report may include investment positions or transactions for the company or its clients.
• Recipients should be aware of potential conflicts of interest and use the information at their own risk.