UBS has issued a research report stating it has raised its 2026 net profit forecast for CHINA LIFE (02628) by 37%. This adjustment reflects the company's first-half profit alert and the macroeconomic conditions observed so far in the second half of the year.

The firm has reiterated its "Buy" rating on the insurer, maintaining its H-share target price at HK$40.

UBS noted that CHINA LIFE's interim performance forecast for 2026 significantly exceeded expectations. The company anticipates its first-half net profit to increase by 215% to 235% year-on-year, reaching between 129 billion and 137 billion yuan. This surpasses both buy-side expectations and the market's full-year forecast of 126 billion yuan.

The report highlighted that the insurer's second-quarter net profit is estimated to have surged by 8 to 8.7 times year-on-year to a range of 109 billion to 118 billion yuan. This robust performance was primarily driven by strong growth in investment returns and an improvement in insurance service results.

However, the momentum in new business value (VNB) for CHINA LIFE cooled in the second quarter. UBS estimates that first-half VNB grew by 33% year-on-year, a slowdown from the 76% growth seen in the first quarter.

This deceleration is attributed to a high base effect from extended sales in the same period last year, the front-loading of long-term product sales in this year's first quarter, and tighter regulatory requirements on commission consistency for bancassurance channels in the second quarter.

Although VNB growth may slow further in the third quarter due to new regulatory measures and the high base, UBS expects CHINA LIFE to still achieve double-digit VNB growth for the full year.