Jefferies analyst Sam Wong upgraded the rating on China Pacific Insurance (Group) Co (CHPXF – Research Report) to a Buy on April 26, setting a price target of HK$18.00.
Sam Wong’s rating is based on a comprehensive analysis of China Pacific Insurance (Group) Co’s recent financial performance and market position. Despite challenges in the sector, CPIC reported a first-quarter profit that exceeded market expectations, showing a modest year-on-year increase. The company’s value of new business (VNB) saw a significant growth of 31% year-on-year, bolstered by a robust agency business. Furthermore, the property and casualty (P&C) segment also posted improvements despite adverse weather conditions. Wong anticipates a positive market reaction to these results, especially given their resilience when compared to the previous strong quarter.
The report highlights key strengths such as the impressive margin improvement in VNB, driven by agency productivity enhancements, and a better combined ratio (CoR) due to advancements in underwriting quality and cost control measures. These positives have led to a robust income increase in the P&C insurance segment. Although there are concerns, such as investment yield pressures and a decrease in life core solvency, Wong believes that the company’s sound bottom-line performance and better-than-peer VNB and CoR metrics justify an upgrade to a Buy rating. This confidence is further supported by the company’s ability to maintain profitability relative to its competitors, suggesting a resilient outlook for investors.
CHPXF’s price has also changed moderately for the past six months – from $2.440 to $2.190, which is a -10.25% drop .
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China Pacific Insurance (Group) Co (CHPXF) Company Description:
China Pacific Insurance (Group) Co. Ltd. engages in the insurance business. It operates through the following segments: Life Insurance, Property and Casualty Insurance, and Other Businesses. The Life Insurance segment offers RMB Life insurance. The Property and Casualty insurance segment provides RMB and foreign-currency property and casualty insurance. The Other business segment handles management services and usage of fund services. The company was founded on May 13, 1991 and is headquartered in Shanghai, China.
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