Ping An (2318 HK/601318 CH)

1H26 preview: 2Q OPAT strength persists while NBV takes a breather

Ping An is set to release its 1H26 results on Aug 20 (Thu) post-market. We estimate Group OPAT at RMB83.3bn (+7.2% YoY), implying a robust 2Q26 increase of 6.8% (vs. +7.6% in 1Q26). We expect Group NPAT to reach RMB83.8bn (+23% YoY), slightly above OPAT, reflecting positive short-term investment variances from the 2Q equity market rally (i.e. CSI300: +12% in 2Q26 vs. -4% in 1Q26/+1% in 2Q25) and revaluation gains on the conversion value of the outstanding convertible bonds.

Key drivers for this solid 1H26 performance include 1) L&H OPAT expected to grow ~3% YoY (CMBI est) benefiting from a more stable interest rate environment in 2Q26 (i.e. 10YR government bond yield down 5.7bps, vs. -17bps in 2Q25), which should aid new business contractual service margin (NB CSM) growth. This is partially offset by a near-term deceleration in CSM release, as in-force book mix shifts toward savings products; 2) P&C underwriting to improve on disciplined expense controls, and we project 1H26 COR to edge down to 95.1% (vs. 95.2% in 1H25); 3) PAB to deliver quality growth in line with its year-start guidance; 4) Asset management profit momentum likely sustained thanks to improving sentiment and trading activities. We remain positive on the Group's core earnings trajectory, and reiterate our view on L&H CSM growth inflection by FY26E. Maintain BUY, with TP at HK$86/RMB75 (unchanged) based on SOTP implying 0.83x FY26E P/EV.

L&H core metrics back on track. We estimate 2Q26 Group OPAT at RMB42.5bn (+6.8% YoY) driven by cross-segment growth. L&H OPAT is likely to sustain its uptrend as CSM release gradually returns to a growth trajectory. We estimate the Group's NB CSM to rise by mid-teens YoY in 1H26 against a more stabilized interest rate backdrop, though partially offset by a lower CSM release rate due to in-force product mix shift toward savings-type policies. We maintain our view that L&H CSM growth inflection will reach by FY26E..

2Q NBV may moderate on stringent regulations and margin recalibration. We forecast 1H26 NBV at RMB25bn (+12% YoY), implying a flattish 2Q26. This moderation reflects 1) stringent regulatory oversight on bancassurance expenses extending from commissions to the full fee structure (i.e. Circular 65 in Mar 2026); 2) a high base effect following the actuarial assumption changes as of end-FY25, which left NBV margin in 1H25 unadjusted. Looking into 2H26E, we think the high base impact on new policy sales could be more evident in 3Q26, while the NBV margin drag should gradually normalize toward year-end.

Higher OCI allocation lowers bottom-line upside from equity rally. Unlike major peers, Ping An captured less NPAT upside from the 2Q equity market rally (i.e. CSI 300+12%) largely due to its higher allocation of stocks and equity funds to FVOCI relative to FVTPL. As of FY25, Ping An's FVOCI stock exposure was at 43.6% (vs. listed peers at 10%-31%). We forecast net asset value at RMB1.12tn by 1H26, supported by 1) robust retained profit growth from net earnings, and 2) a modest positive impact from higher FVOCI reserves (lower spot yields) partially offset by an increase in insurance finance reserves amid the downward trending 20-day avg. bond yield.

Valuation: Ping An-H is trading at 0.52x FY26E P/EV and 0.75x FY26E P/B, with a yield of 6% and an average three-year forward operating ROE >13%. We are constructive on the prospect of Ping An's core business improvements, including 1) accelerating Life OPAT growth in FY26E driven by CSM release and balance approaching to inflection; 2) PAB profit enhancement; and 3) ongoing de-risking of the AM segment. Maintain BUY, with our TP at HK$86/RMB75 (unchanged) for H/A share, which implies 0.83x FY26E P/EV and 1.2x FY26E P/B.

2318 HK 601318 CH

BUY BUY

Maintain Maintain

TP HK$86.00 RMB75.00

Prior TP HK$86.00 RMB75.00

Up/Downside 52.9% 41.8%

Current Price HK$56.3 RMB52.9

China Insurance

Nika MA

(852) 39000805

nikama@cmbi.com.hk

12-mth Price Performance



Source: FactSet

Stock Performance

2318 HK

601318 CH

Abs.

Rel.

Abs.

Rel.

1-mth

3.4%

-1.6%

7.8%

12.9%

3-mth

-9.4%

-5.0%

-9.1%

-4.9%

6-mth

-19.3%

-15.0%

-20.1%

-15.9%

Source: FactSet

Stock data

(LC)

2318.HK

601318.CH

Mkt Cap(bn)

1,008.6

963.9

Avg.3mths t/o(mn)

2,105.48

4,989.10

52w High

73.45

74.32

52w Low

50.55

47.23

Issued Shares(mn)

18,108

18,108

Related reports:

1. 1Q OPAT a slight beat; positive outlook for full-year NBV and life OPAT acceleration, Apr 29, 2026

1. 1Q26 preview: Expect resilient OPAT, NPAT to slide on equity swings; solid NBV uptrend, Apr 22, 2026

1. Group OPAT back to double-digit rise; expect CSM to return to positive growth in 2026E, Mar 30,2026

1. Banca fuelling NBV growth in jumpstart sales; 4Q earnings could ease on growth stock corrections, 23 Jan 2026

1. China Insurance - Easing solvency risk factors to steer insurance funds into long-term stockholdings, 8 Dec 2025

1. 3Q earnings beat; improving business quality with catalysts across-the-board worth to expect, 31 Oct, 2025


Earnings Summary

(YE 31 Dec)

FY24A

FY25A

FY26E

FY27E

FY28E

Net profit (RMB mn)

126,607

134,778

148,129

163,434

180,303

EPS, diluted (RMB)

6.99

7.44

8.18

9.03

9.96

Consensus EPS (RMB)

n.a

n.a

8.21

8.99

9.79

P/B(x)

0.9

0.9

0.8

0.7

0.7

P/Embedded value(x)

0.6

0.6

0.5

0.5

0.5

Dividend yield(%)

5.3

5.6

6.0

6.3

6.7

ROE(%)

13.9

14.0

13.8

14.0

14.0

Source: Company data, Bloomberg, CMBIGM estimates

Catalysts: 1) faster-than-expected L&H CSM balance growth turnaround within 2026E; 2) continued AM OPAT outperformance led by the de-risking progress; 3) accelerating OPAT payout ratio growth; 4) significant rallies in equity markets; 5) new protection-type product rollouts, i.e. participating critical illness, etc.

Key risks: 1) regulatory tightening on life insurance and financial conglomerates; 2) heightened equity market volatility; 3) a prolonged low-interest rate environment; 4) intensified pricing competition in P&C industry; 5) asset quality deterioration; and 6) a significant decline in Group capital level weighing on DPS growth, etc.

Ping An-H (2318 HK): We derive our price target of HK$86 for Ping An-H (2318 HK) based on SOTP, assuming a 12.5% cost of capital and 2.5% terminal growth rate. Our valuation includes 1) 1.3x Life EV, based on ~13% average ROEV in FY26-28E; 2) 0.9x book value (BV) for Ping An P&C; 3) 0.6x BV for PAB; 4) 1.0x BV for AM and other segments; 5) HK$0.8 per share for finance enablement businesses based on P/B-ROE; and 6) a 15% Group conglomerate discount. Our TP implies 0.83x FY26E P/EV and 1.2x FY26E P/B, vs. currently trading at 0.52x FY26E P/EV and 0.75x FY26E P/B.

Ping An-A (601318 CH): We derive our price target of RMB75 for Ping An-A (601318 CH) based on SOTP and by applying a CNY/HKD exchange rate of 1.09 and an H/A discount of 7% , referring to an average of year-to-date trading. Our TP implies 0.83x FY26E P/EV and 1.2x FY26E P/B.

Investment thesis: Ping An is in the advanced phase of de-risking its property exposure, and with consecutive provisions being made for the AM segment, we expect the AM drag to ease further, which could drive the Group's valuation rerating over time. As of FY25, the operating loss from AM segment narrowed significantly to RMB3.8bn from RMB11.9bn in the prior year. We believe continued improvement in its core business performance should support a share price re-rating, alongside mgmt.'s focus on shareholder returns and an enhanced balance sheet. We like Ping An for its resilient growth recovery driven by 1) Life OPAT growth acceleration in 2026E, as CSM release approaches an inflection point; 2) continued progress on AM de-risking; and 3) an advanced deployment in technology and the buildout of a healthcare and elderly care ecosystem. We see Ping An as a pioneer in life insurance reform, and expect intra-Group cooperation to further drive synergies and operational efficiency.

Company description: Founded in 1988, Ping An is a leading financial conglomerate with businesses spanning life and P&C insurance, pension banking, brokerage, trust, and other financial services. The company pursues a technology-empowered growth strategy across core financial businesses of insurance, banking, brokerage, and asset management. As of FY25, Ping An ranked as the second-largest Life and P&C insurers in China by total written premiums. The banking business segment is operated by its subsidiary Ping An Bank (000001 CH, 58% Group stake), which has a focus on retail and SME businesses. Ping An Healthcare and Technology (1833 HK, 53% Group stake) was listed in May 2018 as China's first listed internet-health company.


Focus Charts

Figure 1: Ping An's P/EV(x) valuation band


Source: Bloomberg, CMBIGM estimates | Note: stock price data quoted by market close on Jul 21, 2026 (Tue).

Figure 2: Ping An's P/B(x) valuation band


Source: Bloomberg, CMBIGM estimates | Note: stock price data quoted by market close on Jul 21, 2026 (Tue).

Figure 3: Listed insurers' OCI stocks allocation in FY25 Figure 4: Stock mix by FVTPL vs. FVOCI as of FY25


Source: Company data, CMBIGM


Source: Company data, CMBIGM


Financial Summary

INCOME STATEMENT

2023A

2024A

2025A

2026E

2027E

2028E

YE 31 Dec (RMB mn)

Insurance revenue

536,440

551,186

559,502

572,386

595,452

627,698

Insurance service expenses

(440,178)

(449,102)

(453,268)

(464,871)

(484,330)

(510,962)

Net expenses from reinsurance contracts held

(3,731)

(3,601)

(5,066)

(5,302)

(5,532)

(5,838)

Insurance service results

92,301

98,127

100,970

102,010

105,376

110,673

Net finance (expenses)/income from insurance contracts

(123,959)

(172,662)

(179,978)

(202,513)

(227,151)

(255,811)

Net finance (expenses)/income from reinsurance contracts

542

960

336

339

359

384

Interest income

118,503

123,627

135,798

150,850

170,545

191,693

Net investment income

33,324

161,074

154,544

164,538

185,525

208,261

Other gains/(losses) from changes in fair value

(9,940)

(19,814)

(13,795)

(12,435)

(13,784)

(13,928)

Net investment results

18,470

93,185

96,905

100,780

115,494

130,599

Net interest income from banking operations

118,947

93,913

88,662

86,134

83,663

80,997

Net interest income/(expenses) from non-banking operations

(24,346)

(19,405)

(20,533)

(20,397)

(21,191)

(22,924)

Loan loss provisions

(62,833)

(56,245)

(54,738)

(53,326)

(52,247)

(50,887)

Other fee and commission income/(expenses)

(8,773)

(7,841)

(9,779)

(9,619)

(9,536)

(9,455)

Other income

68,804

65,191

73,345

80,101

88,363

98,421

Other expenses

(129,813)

(139,117)

(137,291)

(144,354)

(152,924)

(163,526)

Foreign exchange gains/losses

120

380

618

618

618

618

Other results

7,912

(17,338)

(7,481)

(6,814)

(7,356)

(8,915)

Profit before tax

120,117

170,495

185,590

190,691

207,701

225,963

Income taxes

(10,843)

(23,762)

(27,289)

(24,202)

(25,328)

(26,413)

Net profit

109,274

146,733

158,301

166,488

182,373

199,550

Net profit attributable to shareholders

85,665

126,607

134,778

148,129

163,434

180,303

BALANCE SHEET

2023A

2024A

2025A

2026E

2027E

2028E

YE 31 Dec (RMB mn)

ASSETS

Cash and amount due from banks and other financial institutions

804,077

1,018,027

1,189,867

1,268,310

1,355,602

1,402,775

Balances with central bank and statutory deposits

329,531

344,608

334,290

338,552

342,868

345,047

Intangible assets

99,078

97,263

83,478

59,290

42,110

35,489

Investments in associates and joint ventures

258,877

185,514

141,251

144,090

146,986

148,456

Property

50,401

48,603

46,934

47,032

47,131

47,180

Investment property

121,406

119,158

128,259

141,158

155,926

164,094

Reinsurance contract assets

22,215

26,084

25,515

28,685

31,546

33,073

Loans and advances to customers

3,320,110

3,294,053

3,320,386

3,379,289

3,462,564

3,527,881

Fixed maturity investments

4,976,779

5,912,846

6,074,144

6,705,605

7,429,889

7,831,064

Equity investments

1,130,853

1,328,664

1,928,348

2,142,865

2,389,790

2,526,941

Derivative financial assets

44,978

68,698

30,002

33,077

36,468

38,291

Deferred tax assets

101,337

122,012

114,640

90,270

71,081

63,075

Other assets

323,775

392,297

481,357

2,127,922

1,710,628

1,545,174

Total assets

11,583,417

12,957,827

13,898,471

16,506,146

17,222,588

17,708,540

LIABILITIES

Due to banks and other financial institutes

963,718

838,183

1,104,609

972,826

1,021,468

1,133,064

Customer deposits and payables to brokerage customers

3,534,539

3,710,167

3,809,246

6,044,885

6,166,387

6,228,051

Insurance contract liabilities

4,159,801

4,984,795

5,360,910

5,902,823

6,491,389

6,805,667

Obligations under repurchase agreements

241,803

462,292

643,547

521,273

422,231

342,007

Derivative financial instruments

44,531

74,937

46,862

47,804

48,765

49,252

Deferred tax liabilities

14,148

13,977

6,647

3,739

2,103

1,577

Current tax liabilities

7,117

14,970

11,095

7,101

4,545

3,636

Other liabilities

1,388,743

1,553,225

1,499,030

1,410,437

1,327,080

1,325,269

Total liabilities

10,354,453

11,653,115

12,482,483

14,910,889

15,483,969

15,888,524

EQUITIES

Share capital

18,210

18,210

18,108

18,108

18,108

18,108

Reserves

263,752

221,594

215,070

260,348

253,733

249,945

Retained profits

622,050

693,797

767,241

866,336

978,486

1,043,582

Total shareholders' equity

899,011

928,600

1,000,419

1,144,792

1,250,327

1,311,635

Non-controlling interests

329,953

376,112

415,569

450,465

488,292

508,381

Total equity

1,228,964

1,304,712

1,415,988

1,595,257

1,738,620

1,820,016

Total liabilities & equity

11,583,417

12,957,827

13,898,471

16,506,146

17,222,588

17,708,540



PER SHARE DATA

2023A

2024A

2025A

2026E

2027E

2028E

YE 31 Dec

DPS (RMB)

2.43

2.55

2.70

2.90

3.07

3.26

EPS, diluted (RMB)

4.74

6.99

7.44

8.18

9.03

9.96

Consensus EPS (RMB)

n.a

n.a

n.a

8.21

8.99

9.79

No. of shares basic (mn)

18,210

18,210

18,108

18,108

18,108

18,108

PROFITABILITY

2023A

2024A

2025A

2026E

2027E

2028E

YE 31 Dec

Return on equity (ROE)

9.7%

13.9%

14.0%

13.8%

14.0%

14.0%

VNB margin (FYAP basis)

23.7%

18.5%

23.4%

23.8%

24.9%

25.9%

Combined ratio(%)

100.7%

98.3%

96.8%

96.8%

96.7%

96.6%

VALUATION

2023A

2024A

2025A

2026E

2027E

2028E

YE 31 Dec

P/Embedded value(x)

0.6

0.6

0.6

0.5

0.5

0.5

P/B(x)

1.0

0.9

0.9

0.8

0.7

0.7

Dividend yield(%)

5.1

5.3

5.6

6.0

6.3

6.7

Source: Company data, CMBIGM estimates. Note: The calculation of net cash includes financial assets. | Note: stock price data quoted by market close on Jul 21, 2026 (Tue).


Disclosures & Disclaimers

Analyst Certification

The research analyst who is primary responsible for the content of this research report, in whole or in part, certifies that with respect to the securities or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about the subject securities or issuer; and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific views expressed by that analyst in this report. Besides, the analyst confirms that neither the analyst nor his/her associates (as defined in the code of conduct issued by The Hong Kong Securities and Futures Commission) (1) have dealt in or traded in the stock(s) covered in this research report within 30 calendar days prior to the date of issue of this report; (2) will deal in or trade in the stock(s) covered in this research report 3 business days after the date of issue of this report; (3) serve as an officer of any of the Hong Kong listed companies covered in this report; and (4) have any financial interests in the Hong Kong listed companies covered in this report.

CMBIGM Ratings

BUY : Stock with potential return of over 15% over next 12 months

HOLD : Stock with potential return of +15% to -10% over next 12 months

SELL : Stock with potential loss of over 10% over next 12 months

NOT RATED : Stock is not rated by CMBIGM

OUTPERFORM : Industry expected to outperform the relevant broad market benchmark over next 12 months

MARKET-PERFORM : Industry expected to perform in-line with the relevant broad market benchmark over next 12 months

UNDERPERFORM : Industry expected to underperform the relevant broad market benchmark over next 12 months

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