Soochow Securities has issued a research report maintaining a "Buy" rating on CHINA TAIPING (00966). Based on the company's projected performance growth for 2025, the firm has raised its profit forecasts, estimating net profit attributable to shareholders for 2025-2027 to be HKD 27.0/20.0/22.2 billion, respectively (previous forecasts were HKD 9.7/10.9/12.5 billion). The current market valuation corresponds to a 2026E price-to-book (P/B) ratio of 0.74x and a price-to-embedded value (P/EV) ratio of 0.38x, which remain at low levels. The securities firm is optimistic about the company's transition to participating life insurance products and the ongoing optimization of the combined ratio in its property and casualty insurance business. The main points from Soochow Securities are as follows.

A recent event on January 19 saw CHINA TAIPING release a performance forecast announcement, indicating that its net profit attributable to shareholders for 2025 is expected to increase by approximately 215%-225% year-on-year, reaching an estimated HKD 266-274 billion. Based on the announcement, the net profit attributable to shareholders for the second half of 2025 (H2 2025) is estimated to be around HKD 198-206 billion, representing a year-on-year increase of 7.2 to 7.6 times. In the first half of 2025 (H1 2025), the company's net profit attributable to shareholders was HKD 67.6 billion, up 12.2% year-on-year.

The significant improvement in investment returns and the impact of changes in income tax policies are cited as the primary reasons for the substantial performance growth. The announcement stated that the sharp increase in net profit was due to improved net investment performance compared to 2024, along with a one-time effect from a new corporate income tax policy introduced by tax authorities for the insurance industry. Firstly, in 2025, the CSI 300 Index and the Wind All Share Index rose by 17.7% and 27.7% respectively, both performing better than their 2024 gains of 14.7% and 10%. Furthermore, with a significant increase in the scale of public market equity investments allocated by insurance funds, the company benefited more fully from the stock market rally. Secondly, in December 2025, the State Taxation Administration issued a notice stating that for insurance companies implementing new accounting standards in 2025 and prior years, the cumulative impact of retained earnings from the standards transition and annual tax differences can be included in taxable income either in a lump sum starting from 2026 or evenly over five years. Soochow Securities estimates that CHINA TAIPING had previously made relatively sufficient provisions for deferred tax liabilities; consequently, after paying taxes under the new standards, a portion of the over-provided liabilities was reversed, creating a one-time positive impact on current profits.

Potential risks highlighted include a trend of declining long-term interest rates, volatility in the equity market, and pressure on new premium income.