20260722-招银国际-中国平安-601318.SH-1H26_preview_2Q_OPAT_strength_persists_while_NBV_takes_a_breather_6页_630kb

Ping An (2318 HK/601318 CH) Summary

Core Content and Performance Outlook

Ping An is set to release its 1H26 results on August 20. The company is expected to report a Group OPAT of RMB83.3bn (+7.2% YoY), with a notable 2Q26 increase of 6.8%. Group NPAT is projected to reach RMB83.8bn (+23% YoY), slightly above OPAT, due to positive short-term investment variances from the 2Q26 equity market rally (CSI300: +12%) and revaluation gains on convertible bonds.

The key drivers for this performance include:

• L&H OPAT growth: Expected to grow ~3% YoY, aided by a more stable interest rate environment.
• P&C underwriting improvement: Projected to improve with disciplined expense controls, leading to a COR of 95.1% in 1H26.
• PAB growth: Quality growth aligned with year-start guidance.
• Asset management profit momentum: Likely to continue with improving sentiment and trading activities.

Key Metrics and Valuation

• 1H26 NBV: Estimated at RMB25bn (+12% YoY), with a flattish 2Q26 due to regulatory tightening and margin recalibration.
• 2Q26 NBV moderation: Expected to be more evident in 3Q26E, with normalization of NBV margin toward year-end.
• Valuation metrics: Ping An-H is trading at 0.52x FY26E P/EV and 0.75x FY26E P/B. The price target (TP) remains at HK$86/RMB75, implying 0.83x FY26E P/EV and 1.2x FY26E P/B.
• ROE and Dividend Yield: The average three-year forward ROE is >13%, and the dividend yield is projected to increase to 6.7% by FY28E.

Investment Thesis and Catalysts

Ping An is in the advanced phase of de-risking its property exposure, and we expect the AM segment's drag to ease further, potentially leading to a valuation rerating.

Key catalysts for the stock include:

• Faster-than-expected L&H CSM balance growth in FY26E.
• Continued AM OPAT outperformance.
• Accelerating OPAT payout ratio growth.
• Improved equity market sentiment and trading activities.
• New protection-type product rollouts, such as participating critical illness policies.

Risks

Key risks to consider include:

• Regulatory tightening on life insurance and financial conglomerates.
• Heightened equity market volatility.
• Prolonged low-interest rate environment.
• Intensified pricing competition in the P&C industry.
• Asset quality deterioration.
• A significant decline in Group capital level, which could impact DPS growth.

Company Overview

Ping An, founded in 1988, is a leading financial conglomerate in China with businesses spanning life and P&C insurance, pension, banking, brokerage, trust, and other financial services. It is the second-largest Life and P&C insurer in China by total written premiums. The company's banking operations are managed by Ping An Bank (000001 CH, 58% Group stake), focusing on retail and SME businesses. Ping An Healthcare and Technology (1833 HK, 53% Group stake) was listed in May 2018 as China's first listed internet-health company.

Financial Highlights (2023A - 2028E)

Stock Performance

Market Position and Valuation Band

• P/EV: Ping An-H is trading at 0.52x FY26E P/EV, with a TP of HK$86 (0.83x P/EV).
• P/B: Trading at 0.75x FY26E P/B, with a TP of HK$86 (1.2x P/B).

Analyst Ratings

• CMBIGM Ratings:
  • BUY: Stock with potential return of over 15% over next 12 months.
  • HOLD: Stock with potential return of +15% to -10% over next 12 months.
  • SELL: Stock with potential loss of over 10% over next 12 months.

Conclusion

Ping An is viewed as a positive investment opportunity, with a strong core earnings trajectory and multiple catalysts expected to drive performance. The company's de-risking progress, improved business quality, and focus on shareholder returns are key factors supporting the Buy recommendation. However, investors should remain aware of the regulatory and market risks that could affect the company's performance.