HTSC: CHINA TAIPING's net profit attributable to shareholders last year is expected to exceed expectations, target price raised to 26 yuan

Huatai Securities research report pointed out that China Taiping (00966.HK) announced a performance forecast for 2025, expecting a year-on-year increase of 215% to 225% in net profit attributable to shareholders compared to 2024. It is estimated that the company's net profit attributable to shareholders in the second half of the year will increase by as much as 723.1% to 758.2% year-on-year, significantly exceeding previous expectations. According to the company's announcement, the substantial profit increase last year was mainly due to improved investment performance year-on-year and a one-time impact of income tax policies.

Huatai Securities stated that looking ahead to this year, the industry's liabilities are expected to fully shift towards participating insurance. The current actual yield of participating insurance is around 3%, which is significantly higher than traditional insurance (with a prescribed interest rate of 2%). Against the backdrop of high resident savings demand, life insurance products with strong savings characteristics still have strong appeal, and participating insurance is expected to drive resilient growth in liabilities this year.

The firm also noted that the company's transformation to participating insurance is leading the industry, with rich experience. Last year, a new product structure primarily based on participating insurance was basically formed, and this year's sales of participating insurance are expected to show good growth momentum. By distribution channel, the impact of policies such as "integration of reporting and operation" in the agent channel is expected to gradually fade this year, and new premium income from this channel is likely to return to positive growth; meanwhile, the bancassurance channel may still maintain good growth momentum.

Considering the significantly better-than-expected investment income performance in the second half of 2025 and the effect of the tax rate decrease on net profit, the firm raised the group's earnings per share forecasts for 2025 to 2027 to HKD 7.4, 3.48, and 3.88, respectively. Taking into account the resilient NBV growth and favorable investment outlook, the target price based on the DCF valuation method was raised to HKD 26, up from the previous target price of HKD 20, maintaining a "Buy" rating