Ping An (2318 HK/601318 CH) 1Q OPAT a slight beat; positive outlook for full year NBV and life OPAT acceleration

Ping An posted solid 1Q results, with Group OPAT up 7.6% YoY to RMB40.8bn outpacing our estimate of RMB39.2bn (link). This increase can be attributed to 1) a resilient L&H OPAT uptrend (+4.6% vs CMBI est: +4.5%); 2) PAB profit turnaround (+3.0%); and 3) a notable surge in AM profitability (+193.3%). Group NPAT fell 7.4% YoY to RMB25bn, slightly better than our estimate of RMB24.3bn, due to heightened market headwinds in 1Q26. Group net asset value (NAV) grew 1.8% from year-start to RMB1.02tn, in line with our forecast. Life NBV grew 20.8% YoY to RMB15.6bn (vs. CMBI est: RMB15.4bn), primarily driven by new business sales (+45.5% YoY) partially offset by a softening margin (-4.8pct YoY). P&C UW performance was a beat, with COR down 0.8pct YoY to 95.8% and non-auto premium rising 19.5% YoY, which exceeded the industry average growth of 5.3% YoY in 1Q26. Mgmt mentioned in the call that achieving double-digit NBV growth in 2026E is a baseline target, and we are positive on a high-teens NBV uptick and life OPAT acceleration in 2026E as CSM approaches an inflection point. Maintain BUY, with our SOTP-based H/A-share TP at HK$86/RMB75, implying 0.83x FY26E P/EV.

1Q OPAT a slight beat, driven by L&H/PAB/AM. Group OPAT growth in 1Q26 was mainly driven by increases in Life & Health (+4.6%), Ping An Bank (+3.0%) and AM (+193.3%). L&H OPAT growth was broadly in line with our forecast, with new business CSM likely to achieve a promising rise amid stable interest rates. The banking business returned to positive growth, driven by 1) a stabilized NIM (1Q26: 1.79% vs FY25: 1.78%), and 2) non-interest income growth from wealth management and bond investments. AM OPAT amounted to RMB3.2bn in 1Q26, nearly tripling from 1Q25, thanks to upside from brokerage and asset management businesses amid heightened equity volatility, which bolstered trading activity. We maintain our view that continued easing of the AM drag and expected Life OPAT acceleration should drive the Group's valuation re-rating over time.

L&H OPAT in-line; NBV rose on higher new business sales. Life NBV grew 20.8% YoY to RMB15.6bn, driven by strong new policy sales (+45.5%) partially offset by a 4.8pct YoY decline in margin to 23.5%. Mgmt. noted that this margin contraction was not due to product or channel skewness, but rather the fact that the comparable 1Q25 figures were not adjusted for changes in actuarial assumptions. Overall, NBV margin stood stable vs. the year-start level of 23.4%. Bancassurance was the leading channel for NBV growth, with its contribution (together with community finance) rising 6.8pct YoY to 31% in 1Q26. Agent headcount declined 5.4% from year-start to 0.33mn, partly due to seasonality. We expect NBV to reach high-teens YoY growth in 2026E led by new biz sales.

P&C underwriting beat; OPAT weighed by investment. P&C COR improved 0.8pct YoY to 95.8% in 1Q26, better than our estimate of 96.1%, due to lower NAT CAT claims and continued expense rate controls across non-auto insurance lines. Total premium rose 6.8% YoY to RMB91bn, with auto insurance down 0.6% YoY to RMB53bn and non-auto up 19.5% YoY to RMB38bn in 1Q26. Per mgmt., non-auto premium growth was mainly driven by health insurance. UW profit grew 28.4% YoY to RMB3.5bn, but this was partially offset by a decline in investment returns, resulting in a 13.4% YoY decrease in P&C OPAT in 1Q26.

Maintain BUY with TP of HK$86/RMB75. The stock is trading at 0.6x FY26E P/EV and 0.8x FY26E P/B. We are positive on the prospect of Ping An's core business improvement, including 1) Life OPAT acceleration in 2026E as CSM approaches the inflection; 2) PAB profit enhancement; and 3) ongoing progress on AM de-risking. Maintain BUY with our SOTP-based TP at HK$86 (H-share, unchanged) and RMB75 (A-share, added), implying 0.83x FY26E P/EV and 1.2x FY26E P/B.

Earnings Summary

(YE 31 Dec)

FY24A

FY25A

FY26E

FY27E

FY28E

EPS(Reported)(RMB)

7.16

7.68

8.20

8.72

9.44

Consensus EPS(RMB)

n.a

n.a

8.03

8.53

8.94

P/B(x)

1.0

1.0

0.8

0.8

0.7

P/Embedded value(x)

0.7

0.6

0.6

0.6

0.5

Dividend yield(%)

4.9

5.3

5.5

5.8

6.2

Source: Company data, Bloomberg, CMBIGM estimates

2318 HK 601318 CH

BUY BUY

Maintain Maintain

TP HK$86.0 RMB75.0

Prior TP HK$86.0 RMB75.0

Up/Downsid 43.2% 30.1%

Current Pric HK$60.1 RMB57.6

China Insurance

Nika MA

(852) 39000805

nikama@cmbi.com.hk

12-mth Price Performance



Source: FactSet

Share performance

2318.HK

601318.CH

Abs.

Rel.

Abs.

Rel.

1-mth

1.3%

-1.6%

1.2%

-4.4%

3-mth

-15.4%

-8.3%

-11.0%

-16.3%

6-mth

6.9%

9.7%

-0.2%

5.2%

Source: Factset

Stock data

(LC)

2318.HK

601318.CH

Mkt Cap(bn)

1,087.4

1,043.6

Avg.3mths t/o(mn)

2,553.40

4,752.95

52w High

73.45

74.32

52w Low

45.60

50.71

Issued Shares(mn)

18,108

18,108

Auditor: Ernst & Young

Related reports:

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

1. 1H25 a mixed bag: NBV beat while OPAT in line, Aug 28, 2025


Stable NIY; CIY recorded a larger decline. In 1Q26, NIY was broadly stable at 0.8% (unannualized) vs. 0.9% in 1Q25, boding well for a stabilized trend in market interest rate. CIY posted a larger decline of 1.1pct YoY to 0.2% (unannualized), mainly due to heightened equity market headwinds in 1Q. Total investment assets remained stable at ~RMB6.55tn, up 0.9% from year-start.

Catalysts: 1) Life CSM release and balance growth inflection in 2026E; 2) continued AM OPAT outperformance led by faster-than-expected de-risking progress; 3) accelerating OPAT payout ratio growth; 4) significant rallies in equity markets; 5) new protection-typed product rollouts, i.e. participating critical illness.

Key risks: 1) regulatory tightening on life insurance and financial conglomerates; 2) heightened equity market volatility; 3) 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 0.6x FY26E P/EV and 0.8x FY26E P/B.

Ping An-A (601318 HK): 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, vs. currently trading at 0.6x FY26E P/EV and 0.9x 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 rating 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 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.


Financial Summary

INCOME STATEMENT

2023A

2024A

2025A

2026E

2027E

2028E

YE 31 Dec (RMB mn)

Insurance revenue

536,440

551,186

559,502

570,712

594,017

626,469

Insurance service expenses

(440,178)

(449,102)

(453,268)

(463,856)

(483,459)

(510,215)

Net expenses from reinsurance contracts held

(3,731)

(3,601)

(5,066)

(5,286)

(5,518)

(5,824)

Insurance service results

92,301

98,127

100,970

101,791

105,271

110,674

Net finance (expenses)/income from insurance contracts

(123,959)

(172,662)

(179,978)

(202,519)

(227,180)

(255,861)

Net finance (expenses)/income from reinsurance contracts

542

960

336

339

359

384

Interest income

118,503

123,627

135,798

151,689

168,444

187,650

Net investment income

33,324

161,074

154,544

163,491

181,256

201,740

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

100,566

109,095

119,986

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)

(9,610)

(9,518)

(9,429)

Other income

68,804

65,191

73,345

80,126

88,429

98,548

Other expenses

(129,813)

(139,117)

(137,291)

(145,142)

(153,609)

(164,106)

Foreign exchange gains/losses

120

380

618

618

618

618

Other results

7,912

(17,338)

(7,481)

(8,178)

(9,188)

(11,204)

Profit before tax

120,117

170,495

185,590

189,344

200,226

214,306

Income taxes

(10,843)

(23,762)

(27,289)

(27,216)

(28,543)

(29,737)

Net profit

109,274

146,733

158,301

162,128

171,683

184,569

Net profit attributable to shareholders

85,665

126,607

134,778

144,001

153,056

165,744

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

28,689

31,552

33,079

Loans and advances to customers

3,320,110

3,294,053

3,320,386

3,378,649

3,459,909

3,525,498

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

2,125,429

1,700,069

1,535,590

Total assets

11,583,417

12,957,827

13,898,471

16,503,016

17,209,380

17,696,579

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

5,903,488

6,492,648

6,806,826

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

14,911,554

15,485,227

15,889,683

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

862,540

964,020

1,030,463

Total shareholders' equity

899,011

928,600

1,000,419

1,140,997

1,235,861

1,298,516

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

1,591,462

1,724,153

1,806,896

Total liabilities & equity

11,583,417

12,957,827

13,898,471

16,503,016

17,209,380

17,696,579



PER SHARE DATA

2023A

2024A

2025A

2026E

2027E

2028E

YE 31 Dec

DPS (RMB)

2.48

2.61

2.78

2.92

3.09

3.28

EPS (Reported, RMB)

4.84

7.16

7.68

8.20

8.72

9.44

Consensus EPS (RMB)

n.a

n.a

n.a

8.03

8.53

8.94

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%

13.4%

12.0%

13.0%

Operating ROEV

7.7%

7.5%

7.4%

6.9%

7.2%

7.5%

VNB margin (FYP basis)

23.7%

18.5%

23.4%

24.4%

25.4%

26.5%

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)

0.7

0.7

0.6

0.6

0.6

0.5

P/B(x)

1.1

1.0

1.0

0.8

0.8

0.7

Dividend yield(%)

4.7

4.9

5.3

5.5

5.8

6.2

Dividend payout(%)

51.4

36.5

36.3

35.6

35.5

34.8

Source: Company data, CMBIGM estimates. Note: The calculation of net cash includes financial assets.



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

CMB International Global Markets Limited

Address: 45/F, Champion Tower, 3 Garden Road, Hong Kong, Tel: (852) 3900 0888 Fax: (852) 3900 0800

CMB International Global Markets Limited ("CMBIGM") is a wholly owned subsidiary of CMB International Capital Corporation Limited (a wholly owned

subsidiary of China Merchants Bank)

Important Disclosures

There are risks involved in transacting in any securities. The information contained in this report may not be suitable for the purposes of all investors. CMBIGM does not provide individually tailored investment advice. This report has been prepared without regard to the individual investment objectives, financial position or special requirements. Past performance has no indication of future performance, and actual events may differ materially from that which is contained in the report. The value of, and returns from, any investments are uncertain and are not guaranteed and may fluctuate as a result of their dependence on the performance of underlying assets or other variable market factors. CMBIGM recommends that investors should independently evaluate particular investments and strategies, and encourages investors to consult with a professional financial advisor in order to make their own investment decisions.

This report or any information contained herein, have been prepared by the CMBIGM, solely for the purpose of supplying information to the clients of CMBIGM or its affiliate(s) to whom it is distributed. This report is not and should not be construed as an offer or solicitation to buy or sell any security or any interest in securities or enter into any transaction. Neither CMBIGM nor any of its affiliates, shareholders, agents, consultants, directors, officers or employees shall be liable for any loss, damage or expense whatsoever, whether direct or consequential, incurred in relying on the information contained in this report. Anyone making use of the information contained in this report does so entirely at their own risk.

The information and contents contained in this report are based on the analyses and interpretations of information believed to be publicly available and reliable. CMBIGM has exerted every effort in its capacity to ensure, but not to guarantee, their accuracy, completeness, timeliness or correctness. CMBIGM provides the information, advices and forecasts on an "AS IS" basis. The information and contents are subject to change without notice. CMBIGM may issue other publications having information and/ or conclusions different from this report. These publications reflect different assumption, point-of-view and analytical methods when compiling. CMBIGM may make investment decisions or take proprietary positions that are inconsistent with the recommendations or views in this report.

CMBIGM may have a position, make markets or act as principal or engage in transactions in securities of companies referred to in this report for itself and/or on behalf of its clients from time to time. Investors should assume that CMBIGM does or seeks to have investment banking or other business relationships with the companies in this report. As a result, recipients should be aware that CMBIGM may have a conflict of interest that could affect the objectivity of this report and CMBIGM will not assume any responsibility in respect thereof. This report is for the use of intended recipients only and this publication, may not be reproduced, reprinted, sold, redistributed or published in whole or in part for any purpose without prior written consent of CMBIGM. Additional information on recommended securities is available upon request

Additional information on recommended securities is available upon request.

For recipients of this document in the United Kingdom

This report has been provided only to persons (I)falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended from time to time) ("The Order") or (II) are persons falling within Article 49(2) (a) to (d) ("High Net Worth Companies, Unincorporated Associations, etc.,) of the Order, and may not be provided to any other person without the prior written consent of CMBIGM.

For recipients of this document in the United States

CMBIGM is not a registered broker-dealer in the United States. As a result, CMBIGM is not subject to U.S. rules regarding the preparation of research reports and the independence of research analysts. The research analyst who is primary responsible for the content of this research report is not registered or qualified as a research analyst with the Financial Industry Regulatory Authority ("FINRA"). The analyst is not subject to applicable restrictions under FINRA Rules intended to ensure that the analyst is not affected by potential conflicts of interest that could bear upon the reliability of the research report. This report is intended for distribution in the United States solely to "major US institutional investors", as defined in Rule 15a-6 under the US, Securities Exchange Act of 1934, as amended, and may not be furnished to any other person in the United States. Each major US institutional investor that receives a copy of this report by its acceptance hereof represents and agrees that it shall not distribute or provide this report to any other person. Any U.S. recipient of this report wishing to effect any transaction to buy or sell securities based on the information provided in this report should do so only through a U.S.-registered broker-dealer.

For recipients of this document in Singapore

This report is distributed in Singapore by CMBI (Singapore) Pte. Limited (CMBISG) (Company Regn. No. 201731928D), an Exempt Financial Adviser as defined in the Financial Advisers Act (Cap. 110) of Singapore and regulated by the Monetary Authority of Singapore. CMBISG may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, as defined in the Securities and Futures Act (Cap. 289) of Singapore, CMBISG accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact CMBISG at +65 6350 4400 for matters arising from, or in connection with the report.