UOB Kay Hian raises target price of PICC P&C (02328) to HK$21.8 on increasing premiums for new energy vehicles driving profitability.

UBS released a research report stating that the competitive threat of affiliated insurance companies of car manufacturers is limited. They believe that with strong pricing and claims capabilities, PICC P&C (02328) will benefit and is expected to achieve a turnaround faster than its peers by 2025. Therefore, UBS has raised the net profit forecast of PICC P&C for 2025 to 2029 by 3% to 8%, and the target price has been raised from HK$20.7 to HK$21.8. They have reiterated their "buy" rating. UBS forecasts that the annual compound growth rate (CAGR) of the mainland's new energy vehicle insurance premiums will reach 27% from 2024 to 2030, totaling 592 billion RMB, mainly driven by the expansion of fleet size. The industry's comprehensive cost ratio (CoR) for new energy vehicles is projected to be 107% in 2024, with a turnaround expected by 2027. Therefore, UBS predicts that the underwriting profit for new energy vehicles will reach 17 billion RMB by 2030.