Huayuan Securities initiates coverage on ZA ONLINE: Driven by the "Insurance + Technology" dual engines, it gives a "Buy" rating

Huayuan Securities recently released a research report, initiating coverage on ZA ONLINE (6060.HK) with a "Buy" rating. As the first internet insurance company in China, ZA ONLINE has achieved a total premium of 35.7 billion yuan by 2025, ranking eighth in the domestic property insurance industry, thanks to its "Insurance + Technology" dual-engine strategy. The company has a strong technological foundation and adheres to long-termism, aiming for compound growth. By 2025, the adjusted net profit attributable to the parent company is expected to grow by 227% compared to 2020, with the comprehensive cost ratio decreasing by 6.7 percentage points over five years to 95.8%, achieving underwriting profitability for five consecutive years. From the perspective of its core insurance business, ZA ONLINE has formed a collaborative development of four major ecosystems: health, digital life, consumer finance, and automotive, with AI applications significantly enhancing the company's marketing efficiency and refined operational capabilities. Among these, health insurance and auto insurance are currently the core growth drivers. In the health ecosystem, the two major brands "Zunxiang e Sheng" and "Zhongminbao" have created a complementary product matrix targeting healthy individuals and non-standard bodies, respectively. By 2025, the premium for the "Zunxiang e Sheng" series is expected to reach 8.34 billion yuan, a year-on-year increase of 79%; the premium for "Zhongminbao" is expected to increase by 456% year-on-year, while the comprehensive cost ratio of the health ecosystem is expected to improve by 3.6 percentage points year-on-year. The automotive ecosystem also shows impressive performance, with premium income expected to grow by 34.6% year-on-year by 2025, far exceeding the industry's single-digit growth rate. The premium for new energy vehicle insurance is expected to grow by 206.2% year-on-year, accounting for 28.3% of the automotive ecosystem. Recently, the range of self-pricing coefficients for new energy vehicle insurance has been further expanded, which is expected to better align insurance pricing with risk and further enhance underwriting profits. In addition, ZA ONLINE has been approved for independent operation qualifications for compulsory traffic accident liability insurance in Shanghai and Zhejiang, with more regions expected to follow in the future. In the digital life ecosystem, innovative businesses (such as pet insurance and low-altitude economy insurance) are expected to achieve a compound annual growth rate of 48% in premium income from 2021 to 2025, far exceeding the overall level of the sector. By 2025, pet insurance premiums are expected to reach approximately 1.3 billion yuan, serving over 8 million customers, becoming a new growth pole. The consumer finance ecosystem is actively shrinking in scale, with controllable risks. Huayuan Securities believes that areas such as health insurance, auto insurance, and pet insurance at ZA ONLINE are expected to drive the company's total premium growth rate to continue exceeding the industry average. The expansion of pricing coefficients for new energy vehicle insurance and the consolidation of self-operated channels will help maintain a favorable level of comprehensive cost ratio. Huayuan Securities expects that the net profit attributable to the parent company of ZA ONLINE will continue to grow from 2026 to 2028. Considering the continuous improvement of the company's comprehensive cost ratio, sufficient premium growth momentum, and stable operation on the investment side, it initiates coverage with a "Buy" rating