FIRST SHANGHAI has issued a research report initiating a "Buy" rating on PICC P&C (02328) with a target price of HK$23.3, representing a 21.7% upside from the current price. The target implies a 2026 P/B ratio of 1.5x. The report highlights that as China undergoes economic restructuring and demand for social risk protection grows, the non-auto insurance segment will become the core driver of PICC P&C's premium growth.

The firm is undergoing a critical strategic transformation. Domestically, its non-auto insurance business has emerged as a key growth pillar alongside auto insurance, demonstrating robust momentum and sustained profitability improvements. Internationally, the company’s global expansion strategy supports Chinese enterprises going overseas, unlocking a second growth curve.

For the first three quarters of 2025, PICC P&C reported insurance service revenue of RMB 385.9 billion, up 5.9% YoY. Auto insurance contributed RMB 227.6 billion (+3.7% YoY), while non-auto insurance revenue reached RMB 158.3 billion (+9.3% YoY). Net profit surged 50.5% YoY to RMB 40.3 billion, supported by capital market gains. Total investment income rose 33% YoY to RMB 35.9 billion, with an annualized investment yield of 5.4%, up 0.8 percentage points.

Notably, non-auto premiums accounted for 50.3% of total premiums at RMB 223.06 billion, surpassing auto insurance. The National Financial Regulatory Administration’s new policy on non-auto insurance rate supervision, effective November 1, 2025, is expected to further enhance underwriting margins. The company targets a combined ratio below 96% for auto insurance and under 99% for non-auto insurance in 2025.

Additionally, PICC P&C has launched a five-year internationalization strategy to expand overseas operations significantly. Aligned with China’s "going global" initiatives and RMB internationalization, the strategy focuses on serving Chinese products and enterprises, particularly in new energy vehicle (NEV) insurance and overseas infrastructure projects. The company has already established operations in Hong Kong and Thailand, with plans to expand into Europe and Southeast Asia.

By prioritizing NEV insurance overseas, PICC P&C leverages its domestic expertise in pricing and risk management, creating a competitive edge. With China being a major global trader and investor, the overseas risk protection market presents a vast untapped opportunity worth hundreds of billions.