CLSA has released a research report revising profit and book value forecasts for China Life Insurance Company Limited (02628) in light of recent A-share market adjustments. However, the firm maintained its H-share target price at HK$33 and its A-share (601628.SH) target price at RMB 45. The H-share rating remains "Outperform," while the A-share rating is "Hold."

China Life's 2025 net profit met expectations, with a final dividend declared of RMB 0.618 per share. The total annual dividend per share reached RMB 0.856, representing a 32% year-on-year increase that surpassed prior guidance. Although solvency ratios declined, management anticipates a rebound to 161% by the end of the first quarter of this year.

Full-year net profit grew 44% year-on-year to RMB 154.078 billion, implying a net loss of RMB 13 billion in the fourth quarter. This result was considered within expectations, primarily due to a high base of comparison from the previous year and adjustments in the capital markets during the fourth quarter. Net assets decreased by RMB 31 billion quarter-on-quarter in Q4, possibly reflecting some mark-to-market investment losses.

The report highlighted that the proportion of equity investments within the total investment portfolio increased by 3.67 percentage points year-on-year, marking the most significant shift in asset allocation. This change was mainly driven by a 1.68 percentage point decrease in bond investments and a 1.33 percentage point decline in non-standard equity investments.

New business value grew 36% year-on-year, primarily driven by the bancassurance and other channels, which saw a 169% increase in new business value. The agency channel also contributed, with new business value rising 25%. CLSA views China Life as a primary beneficiary of both tighter industry regulations on bancassurance commission payments and the trend of funds shifting from time deposits to insurance products.