UBS: Raises target price of China Life Insurance (02628) to HK$29, increases forecast for after-tax net profit.

UBS released a research report stating that China Life Insurance (02628) is expected to report a strong profit, with the after-tax net profit for the first three quarters of this year expected to increase by 50% to 70% year-on-year, reaching 157 billion to 178 billion RMB, far exceeding market expectations. The after-tax net profit for the third quarter is expected to increase by 75% to 106% year-on-year, mainly due to a significant increase in investment income and the recovery of the insurance service business. Based on the strong profit performance, the expansion of asset management scale, and the rise in interest rates, the bank has raised its after-tax net profit forecast for China Life in 2025 to 2027 by 79%, 23%, and 24% respectively. UBS has raised the target price for China Life from HK$27.4 to HK$29, maintaining a "buy" rating. The bank estimates that the Value of New Business (VNB) for the first three quarters is expected to increase by 36% year-on-year, compared to a 20% increase in the first half of the year, reflecting strong growth momentum in the third quarter. In terms of dividends, although the bank expects strong after-tax net profit for the full year, it believes that dividends will not increase at the same rate, as the group aims for stable dividend growth. Assuming a 10% to 30% increase in dividends, the dividend yield for H shares will reach 3.4% to 4%.