CICC has released a research report indicating that PICC P&C (02328) is currently trading at 1.0x 2026e P/B. The firm maintains its 2026e/2027e earnings forecasts for the company and sustains its Outperform rating. The valuation basis has been rolled forward to 27e P/B, with a target valuation multiple of 1.1x. CICC has raised the target price by 7.4% to HK$20.5, corresponding to 1.2x/1.1x 26e/27e P/B, implying a 28% upside from the current share price.

Core insights from CICC are as follows:

1H26 net profit attributable to shareholders broadly in line with expectations

The company released its 1H26 results: net profit attributable to shareholders rose 32.1% year-on-year to RMB 32.296 billion. Net assets attributable to shareholders increased 6.2% from the beginning of the year to RMB 303.69 billion, in line with forecasts. The interim dividend per share (DPS) grew 41.7% year-on-year to RMB 0.34, exceeding expectations.

Premium income growth slows while business mix continues to improve

In 1H26, PICC P&C reported total premium income of RMB 327.53 billion, up 1.3% year-on-year. Within this, auto insurance premiums edged up 0.1% to RMB 144.23 billion, mainly due to sluggish new car sales. The auto insurance business structure is steadily optimizing, with the number of insured private vehicles rising 3.8% year-on-year to 43.89 million units. The market share of new car premiums for private vehicles increased 0.3 percentage points year-on-year. Non-auto insurance premiums grew 2.3% to RMB 183.30 billion, with enterprise property insurance/liability insurance/health and accident insurance/agricultural insurance changing by -0.5%/+10.8%/+6.1%/-1.3% year-on-year, respectively.

Combined ratio continues to improve

In 1H26, the company's combined ratio (CoR) improved 0.8 percentage points year-on-year to 94.0%, reaching its best level in recent years. Underwriting profit increased 18.1% year-on-year to RMB 15.38 billion. The auto insurance CoR improved 0.7 percentage points to 93.5%, supported by strict expense control, with the auto insurance expense ratio down 1.2 percentage points year-on-year to 19.9%. The non-auto insurance CoR declined 1.2 percentage points year-on-year. Following the publication of the "Non-auto Insurance Comprehensive Governance Action Plan" by the National Financial Regulatory Administration, which could benefit leading property insurers with strong operational capabilities, CICC expects the company's underwriting profitability to maintain a relatively high level as the comprehensive governance of non-auto insurance continues to deepen.

Enhanced shareholder returns highlight long-term allocation value

In 1H26, the company's non-annualized total investment yield rose 1.2 percentage points year-on-year to 3.8%. Driven by both underwriting profits and investment income, net profit attributable to shareholders increased 32.1% year-on-year to RMB 32.296 billion. Net assets attributable to shareholders grew 6.2% from the beginning of the year, maintaining steady growth. The interim dividend per share increased 41.7% year-on-year to RMB 0.34, further boosting shareholder returns. Looking ahead, although profits may fluctuate due to natural disasters in Q3 and significant stock market corrections, CICC believes this does not alter the company's stable and improving operational trajectory, underscoring its long-term allocation value.

Risks: Significant capital market fluctuations; natural disasters; policy uncertainty.