CPIC released 3Q results with NPAT up 65.5% YoY to RMB38.3bn, at mid-point of announced profit alert (link) to rise by 60%-70%. 3Q NPAT grew 173.6% YoY to RMB13.2bn, driven by a surge in investment income and net fair value gains on top of a low base in 3Q23. Headline NBV rose 37.9% YoY to RMB14.2bn in 9M24, translating to the 3Q NBV on a like-for-like basis surged 75.3% YoY to RMB5.2bn. In 1Q-3Q24, we see accelerated growth of +30.7%/+13.5%/+75.3% YoY from the insurer's quarterly NBV. The exceptional NBV increase in 3Q was resulted from 1) consistent margin expansions driven by increasing par product sales and channel optimization, where NBV margin grew 6.2pct YoY to 20.1% in 9M24; 2) regular- paid new business sales (FYRP) recovered, with par sales doubled both in terms of NBV and FYRP in 3Q24, per mgmt. P&C CoR stayed flat at 98.7%, dragged by heightened catastrophic losses, which adversely affected commercial property, engineering and agriculture insurance. The mgmt. mentioned in call that 3Q catastrophic losses worsened the CoR by 3.0pct. We revise up FY24-26E EPS forecasts by 29%/6%/3% to RMB4.45/3.93/4.25 (table) and raise the 12-month forward TP based on SOTP to HK$35.5 (table), implying 0.5x FY24E P/Group EV (prev. 0.4x) and 1.1x FY24E P/BV (prev. 0.9x). We expect headline NBV to rise 37% YoY, and NPAT/OPAT growth at 57%/3% YoY in FY24. Maintain BUY.

Life NBV growth accelerated in 3Q24. Headline NBV grew 37.9% YoY to

RMB14.2bn in 9M24, with an increase on a like-for-like basis to be even higher. In 3Q, NBV surged 75.3% YoY to RMB5.2bn, driven by both margin expansions (+6.2pct) and rebounded regular-paid new sales (+15.2%). We estimate the NBV margin rose to 23.0% in 3Q24 (vs 9M24: 20.1%), +5.9pct YoY/ +15.0 pct QoQ. We attribute this margin expansion to: 1) elevated sales on floating interest rate products, i.e. participating and universal policies, which were supported by front- loaded demands before the PIR cut in Sep/Oct; and 2) strengthened regular-paid new sales, given evident FYRP increases in both agency (9M24: +12.4%/3Q24: +37%) and bancassurance (9M24: +23.2%). Total FYRP surged 1.38x YoY to RMB18.5bn in 3Q24, leading to a FYP rebound by +15% YoY (vs 2Q24: -29%). We expect full-year NBV to sustain the solid growth trend by +37% YoY (CMBI est), thanks to improved underwriting structure and more efficient channel mix.

Expect strong par sales momentum extending to FY25 jumpstart. According to mgmt., participating policy sales gained traction in Sep, prior to the settlement rate cut from 2.5% to 2.0% in Oct. Par FYRP doubled to RMB 800mn in 3Q24 (vs 1H24: c.RMB400mn), and increased another c.RMB400mn by end Oct. Per mgmt., we estimate the FYRP from participating product sales amounted to c.RMB1.6bn YTD, representing a substantial rise versus

Investment income boosted by net fair value gains. The insurer held c.2.0% of total investment assets in insurance funds to FVOCI stocks, lower than that of FVTPL stocks and equity funds, proportioning to 7.1%/2.2% by 1H24. Net/total investment yield landed at 3.9%/6.3% in 9M24 (annualized), -0.1pct/+3.1pct YoY driven by 3Q equity market rally. Given a prospect of increasing high-yield stocks under FVOCI, we expect the insurer to benefit from a more stable net investment income. 3Q net fair value gains were RMB21.2bn (vs 3Q23: a net loss of 7.25bn).

Valuation: The stock is now trading at 0.4x FY24E P/EV and 0.9x FY24E P/BV, +1.7/+1.8STD above 3-year historical avg. We revise up FY24-26E EPS forecasts by 29%/6%/3% to RMB4.45/3.93/4.25, given a more certain outlook for full-year profitability and NBV growth, on top of improved underwriting channel and product mix. Maintain BUY. We raise 12M-forward TP to HK$35.5 (table), implying 0.5x FY24E P/EV (prev. 0.4x) and 1.1x FY24E P/BV (prev. 0.9x).