G Sachs Raises Target Price for CHINA TAIPING (00966.HK) to $12.6, Maintains Sell Rating

The analyst rating for CHINA TAIPING (00966.HK) was maintained at "Buy" due to several key factors highlighted in the report by DBS Group Research. The target price was raised from $23 to $25, reflecting an optimistic outlook for the company. The report indicates that 2025 is seen as a transitional year for CHINA TAIPING, with over 90% of its new business being par products and a shift in investment strategy from 'high yield' to a barbell strategy. The management's positive view on growth for FY2026, following the completion of adjustments in 2025, and a focus on dividend growth to enhance core solvency capacity further support the favorable rating.

The analyst rating from Goldman Sachs is influenced by several factors: 1. Recent Underperformance: Chinese insurers have underperformed since the end of July, with declines in H-/A-shares, while broader market indices like the HSI and CSI 300 Index have rallied. This underperformance is attributed to high valuation levels following a rebound in stock prices and a weak earnings growth outlook due to a high base effect in the second half of 2024. 2. Improving Risk-Reward: Looking ahead to the upcoming 3Q25 results, Goldman Sachs believes that the risk-reward profile for Chinese insurers is improving. They anticipate that 3Q25 earnings may exceed expectations, driven by gains from equity investments. 3. Growth Projections: The new business value for 2026 is expected to see double-digit growth, and the contractual service profit margin is anticipated to reach a turning point, indicating potential for future profitability. 4. Specific Insurer Outlooks: Among the insurers, Goldman Sachs expects China Life to benefit the most from market changes and yields in 3Q25, followed by China Taiping. NCI is projected to exhibit strong earnings growth, despite some lag in book value and solvency ratio compared to peers. 5. Upgrades: The broker upgraded CPIC from Neutral to Buy and China Taiping from Sell to Neutral, reflecting a more favorable outlook for these companies. Overall, the combination of improving earnings expectations, potential growth, and specific upgrades for certain insurers contributes to the positive analyst rating.

The analyst rating for CHINA LIFE (02628.HK) is "Neutral," with a target price adjustment from HK$21.5 to HK$22.5. This rating likely reflects a cautious outlook on the stock, possibly due to factors such as current market conditions, short selling activity (with a significant ratio of 18.065%), and overall performance trends in the insurance sector. The neutral stance suggests that while the stock may not be expected to decline significantly, there may also be limited upside potential in the near term.