On August 29, CICC released a research report stating that China Taiping announced its H1 2025 results (figures presented in RMB unless otherwise specified), showing the group's net profit attributable to shareholders increased 12.2% year-on-year to HK$6.76 billion, exceeding CICC's expectations. Life insurance new business value (NBV) rose 22.8% year-on-year, generally meeting the firm's expectations. The group's embedded value increased 8.8% from the beginning of the year, while net assets attributable to shareholders grew 4.4% to HK$74.238 billion.

CICC maintains its 2025-2026 earnings forecasts and outperform industry rating, but considering improved Hong Kong stock market sentiment should help the company's valuation recovery, the firm raised the target price 25% to HK$28.4, corresponding to 0.50x 2025e and 2026e P/EV with 55%+ potential upside.

CICC noted that China Taiping's dividend insurance transformation leads peers, with new business interest rate sensitivity significantly reduced. Taiping Life's NBV increased 22.8% year-on-year, with individual and bancassurance channels rising 22.4% and 23.8% respectively. Overall new business value margin improved 3.1 percentage points year-on-year to 21.6%, while individual and bancassurance new business value margins increased 3.6 and 1.8 percentage points to 22.7% and 20.0% respectively.

Individual channel agents earning over one million increased 5.1% year-on-year to 3,031 people. Monthly NBV per supervisor/new recruit rose 23.1% and 9.9% respectively year-on-year. Both individual and bancassurance 13-month and 25-month persistency rates remained at industry-leading levels. Business structure improved significantly, with dividend insurance contributing 91.3% of long-term new business across all channels, including 97.5% for individual and 85.8% for bancassurance.

Benefiting from the substantial optimization of dividend insurance proportion in new business, the company's new business value quality improved significantly. Under adverse scenarios (annual 10% decline in investment returns and risk discount rates), the negative impact on Taiping Life's H1 2025 NBV decreased dramatically from 30.5% in H1 2024 to 5.5%.

Property insurance and reinsurance underwriting profitability showed steady improvement. Taiping Property Insurance's H1 2025 insurance service revenue increased 4.3% year-on-year, with auto insurance and non-auto insurance rising 2.1% and 7.9% respectively. The combined ratio (CoR) improved 1.5 percentage points year-on-year to 95.5%, driving net profit up 87.6% year-on-year to RMB 630 million. Reinsurance business insurance service revenue declined 2.6% year-on-year (RMB basis), with CoR improving 2.9 percentage points to 93.8%. The company maintains value-oriented approach and accelerates business transformation, with reinsurance net profit surging 77.4% year-on-year to RMB 800 million.

Investment pressure weighed on net profit growth, while embedded value (EV) and other long-term indicators showed positive trends. H1 2025 net/total investment yields were 3.11%/2.68%, down 0.36/2.59 percentage points year-on-year. Pressured total investment returns constrained profit growth, while insurance service performance increased an excellent 9.5% year-on-year. Taiping Group/Life EV rose 7.2%/6.5% from year-begin, while group/life contractual service margin (CSM) increased 1.0%/1.1%. Life insurance new business CSM declined 29.5% year-on-year, mainly due to domestic life insurance promoting dividend insurance transformation, where dividend insurance contributes lower contractual service margin than traditional insurance under equivalent conditions.

CICC stated that liability-side leading indicators showed significant improvement trends, and the firm remains optimistic about the company's recovery opportunities. Despite unsatisfactory investment performance, the firm maintains that Taiping Group's major business liability-side leading indicators show substantially improved trends, particularly dividend insurance transformation leading peers and significant enhancement in property and reinsurance underwriting capabilities. This should provide important support for the company's future profitability and shareholder returns, and CICC remains optimistic about the company's valuation recovery.