China Merchants Securities: Maintains "Strong Buy" Rating on PICC P&C, Profit Growth Driven by Asset-Liability Resonance

According to the Zhitong Finance APP, China Merchants Securities released a research report stating that PICC P&C (02328) will experience high profit growth driven by asset-liability resonance in Q3 2025. Looking ahead to the whole year, as the overall sales volume of the automotive market continues to grow, the company's auto insurance premiums are expected to grow steadily, with the auto insurance COR likely to be controlled within 96%. The comprehensive implementation of "reporting and operation in one" for non-auto insurance is beneficial for leading insurance companies with strong compliance operations, risk management, and service capabilities. As a leader in the property and casualty insurance industry, the company's competitive advantages are expected to continue to stand out, with stable ROE and high dividend yield, providing long-term investment value. The current company valuation corresponds to 1.36x PB, maintaining a "strong buy" rating.

The report cites the company's Q3 2025 report, which achieved a net profit of 40.268 billion, a year-on-year increase of 50.5%, with a single-quarter year-on-year increase of 91.5%; the comprehensive cost ratio was 96.1%, a year-on-year decrease of 2.1 percentage points, and the annualized total investment return rate was 5.4%, a year-on-year increase of 0.8 percentage points. In the first three quarters, the company achieved a net profit of 40.268 billion, a year-on-year increase of 50.5% (previously announced growth rate was 40%-60%), with a single-quarter year-on-year increase of 91.5%. From the underwriting side, in the first three quarters, the original premium was 443.182 billion, a year-on-year increase of 3.5%; the comprehensive cost ratio was 96.1%, a year-on-year decrease of 2.1 percentage points, mainly due to the company's continuous strengthening of detailed expense management, improving operational quality and efficiency, with underwriting profit of 14.865 billion, a year-on-year increase of 130.7%. From the investment side, in the first three quarters, the company's annualized total investment return rate was 5.4%, a year-on-year increase of 0.8 percentage points; total investment income was 35.9 billion, a year-on-year increase of 33.0%, mainly due to the rise in the capital market and the optimization of the company's allocation structure, moderately increasing the allocation of high-quality equity assets.

In addition, the company insists on the intrinsic development of auto insurance business, innovative development of commercial non-auto insurance, and high-quality development of policy-based business. In the first three quarters, auto insurance service income was 227.632 billion, a year-on-year increase of 3.7%; the comprehensive cost ratio was 94.8%, a year-on-year decrease of 2.0 percentage points; underwriting profit was 11.729 billion. Non-auto insurance service income was 158.289 billion, a year-on-year increase of 9.3%; the comprehensive cost ratio was 98.0%, a year-on-year decrease of 2.5 percentage points; underwriting profit was 3.136 billion