According to a research report released by Shenwan Hongyuan Group Co., Ltd., SUNSHINE INS (06963) is projected to achieve net profit attributable to parent company of RMB 57.34/60.56/67.88 billion for 2025-2027 respectively (previously estimated 2025E at RMB 80.48 billion, with downward revision mainly due to higher proportion of FVOCI equity investments), representing year-over-year growth of +5.2%/+5.6%/+12.1%. Based on absolute and relative valuation methods, the company's value is estimated at RMB 57.3 billion, with a target price of HK$5.35 per share, maintaining a "Buy" rating.

Shenwan Hongyuan Group Co., Ltd.'s key viewpoints are as follows:

**Steady Profit Growth, Balanced Asset-Liability Performance, Dividend Yield Ranks Among Industry Leaders**

Under the dual bull market conditions for stocks and bonds and continued growth momentum on the liability side, the company's net profit attributable to parent company increased by 45.8% year-over-year to RMB 54.49 billion in 2024. During the volatile capital market conditions in H1 2025, profit performance remained resilient with net profit attributable to parent company growing 7.8% year-over-year to RMB 33.89 billion.

Dividend per share has grown steadily, with the 2024 dividend payout ratio reaching 40.1%, ranking first among listed insurance companies. Based on the closing price on September 22, the dividend yield reached 5.4%, ranking second in the industry. The company values shareholder returns, and it is expected that future dividend strategies will increasingly focus on dividend per share growth, with high dividend characteristics likely to continue being prominent.

**NBV Growth Rate Among the Best, Bancassurance Channel Adheres to High-Quality Development Strategy with Sustained Competitive Advantages**

The company's life insurance business demonstrates strong resilience and growth potential. During the industry downturn from 2020-2022, NBV grew against the trend. In 2023-2024, listed insurers' NBV returned to positive growth, with the company achieving NBV growth of +44.2%/+43.3% year-over-year. H1 2025 NBV grew 47.3% year-over-year to RMB 40.08 billion, with growth rate ranking among industry leaders.

The bancassurance channel represents the company's traditional competitive advantage, significantly benefiting from "report-act integration." In 2024/H1 2025, channel NBVM increased by +6.4pct/+7.2pct year-over-year to 14.2%/19.1%, driving channel NBV growth of +43.6%/+53.0% year-over-year to RMB 28.68/24.52 billion, contributing 60% of total NBV with a proportion significantly higher than other listed insurers, showcasing distinctive business structure characteristics.

**Significant Decline in Liability Costs, Spread Widening Against the Trend in Recent Years**

With a relatively high proportion of new liabilities, the 2024 NBV/effective business value ratio reached 12.79%, ranking third among listed insurers. The decline in new liability costs is expected to more directly reduce existing liability costs.

In 2024, the company significantly optimized both new and existing liability costs, with NBV/VIF breakeven yields declining by -80bps/-11bps year-over-year to 2.91%/2.85%, with reduction rates ranking among industry leaders. The difference between 2024 net investment yield and NBV/VIF breakeven yields was 1.29%/1.35% respectively, increasing by +100bps/+31bps year-over-year, with spreads widening against the trend.

The company emphasizes asset-liability matching and liability cost management. Combined with expectations of predetermined interest rate adjustments, the company proactively launched dividend-type products with predetermined rates of 1.75%/1.5% in Q2 2025, supporting steady operations.

**Continued Increase in Equity Allocation, FVOCI Equity Proportion Exceeds 70%, Steady CSM Growth Rate, Performance Stability Superior to Peers**

As of the end of June, the company's secondary market equity allocation ratio increased by 1.28pct from year-end 2024 to 15.1%. Stock allocation levels continued to rise on the basis of being higher than peers, with allocation ratio increasing by +1.8pct from 2024 year-end to 14.1%. The proportion of stocks classified as FVOCI increased by +1.4pct from 2024 year-end levels to 70.38%, significantly higher than peers.

CSM grew steadily, reaching RMB 50.9 billion at the end of 2024 with year-over-year growth of +12.6%, maintaining steady growth rate while some peers experienced scale declines. CSM amortization speed remained stable, with 2024 CSM amortization scale of RMB 4.056 billion and amortization ratio of 8.45%, establishing a solid foundation for insurance service performance.

**Risk Warnings:** Long-term interest rate decline, equity market volatility, frequent major disasters, regulatory policy impacts exceeding expectations.