According to a research report, CICC has maintained its coverage on SUNSHINE INS (06963), which is currently trading at 0.38x/0.33x 2025e and 2026e P/EV ratios. The firm keeps its 2025-2026 earnings forecasts largely unchanged and maintains a target price of HK$4.60 with an outperform rating, corresponding to 0.40x/0.34x 2025e and 2026e P/EV ratios, and implying a 2.7% potential upside.

The company disclosed its first half 2025 results, with attributable net profit increasing 7.8% year-on-year to RMB 3.39 billion. Life insurance and property insurance net profits rose 5.6% and 2.6% respectively year-on-year. Life insurance new business value (NBV) on a comparable basis surged 47.3% year-on-year to RMB 4.01 billion, while property insurance combined ratio (CoR) improved by 0.3 percentage points year-on-year to 98.8%. Pre-tax earnings were broadly in line with expectations.

**Life Insurance NBV and Contract Service Margin (CSM) Balance Show Rapid Growth with Optimized Product Mix**

In 1H25, Sunshine Life's NBV on a comparable basis jumped 47.3% year-on-year to RMB 4.01 billion, with individual agency and bancassurance channels growing 23.5% and 53% respectively year-on-year. The actual disclosed NBV this year increased 7.0% compared to last year's actual disclosure, achieving growth both on adjusted and unadjusted basis, exceeding expectations. Life insurance CSM balance reached RMB 56.08 billion, up 10.3% from year-end.

By distribution channel, "floating yield + protection products" accounted for over 50% in the individual agency channel, while the same product category represented 27.1% in the bancassurance channel. The product structure optimization is evident under the dividend insurance transformation.

**Property Insurance Underwriting Profitability Improves Year-on-Year**

In 1H25, Sunshine Property Insurance's gross written premiums grew 2.5% year-on-year to RMB 25.27 billion, with non-motor insurance rising 12.5% year-on-year. Non-motor insurance premiums accounted for 50.6% of total premiums, up 4.5 percentage points year-on-year. The combined ratio improved by 0.3 percentage points year-on-year to 98.8%, with loss ratio and expense ratio changing by +2.5 percentage points and -2.8 percentage points respectively year-on-year. Motor insurance CoR improved by 1.6 percentage points year-on-year to 98.1%, with private car premiums increasing their share by 3 percentage points and new energy vehicle insurance premiums rising by 2.1 percentage points.

**Investment Performance Remains Steady Despite High Base Effect**

In 1H25, Sunshine's net and total investment yields were 3.8% and 4.0% respectively. The company's bond investments in 1H24 created a high base effect, but overall investment performance remained steady. In terms of asset allocation, Sunshine increased its equity allocation by 1.8 percentage points compared to year-end 1H25, while also increasing allocation to long-duration government bonds to optimize duration structure and cost-return matching.

**Group Embedded Value Shows Rapid Growth**

In 1H25, Sunshine Group's embedded value reached RMB 128.49 billion, up 11.0% from year-end. Net assets stood at RMB 55.84 billion, mainly due to the company adopting a 60-day moving average government bond yield curve and spot weighting methodology for traditional insurance reserve discount rates.