Guotai Junan Securities: Maintains "Recommended" rating for SUNSHINE INS (06963), overall stability of life insurance liabilities, and outstanding investment performance.

Minsheng Securities released a research report stating that it maintains a "buy" rating on SUNSHINE INS (06963), with forecasted total operating income for the company in 2025E-2027E to be 95.9/100.7/105.4 billion yuan, and net profit attributable to parent company to be 7.1/8.0/8.7 billion yuan, with EPS of 0.61/0.70/0.76 yuan respectively. The company's life insurance business is growing steadily, with a forward-looking approach to cope with declining interest rates, strengthening asset-liability linkage, and continuously improving value creation capabilities. The property insurance business adheres to the development concept of "seeking progress amidst stability", with business expected to maintain rapid growth and comprehensive cost ratio and underwriting profitability expected to continuously improve. Event: The group has not disclosed its third quarter report, but has released the solvency reports of its subsidiaries Sunshine Life and Sunshine Property Insurance as of 3Q25 and unaudited financial data for January-September. Key points from Minsheng Securities are as follows: Life Insurance In the first three quarters of 2025, Sunshine Life achieved total operating income of 33.05 billion yuan, a year-on-year increase of 14.0%; net profit was 5.25 billion yuan, a year-on-year increase of 3.4%. Insurance service income was 12.91 billion yuan, a year-on-year increase of 4.3%; investment income was about 18.23 billion yuan, a year-on-year increase of 24.7%. The company achieved an investment return rate of 1.41% in a single quarter. As of the end of September, the company's core/comprehensive solvency adequacy ratio was 133.5%/194.0%. The liability side of the life insurance business is stable overall, with a strong performance on the investment side. Property Insurance In the first three quarters of 2025, Sunshine Property Insurance achieved total operating income of 38.89 billion yuan, a year-on-year increase of 2.5%; net profit was 1.66 billion yuan, a year-on-year increase of 81.9%. Insurance service income was 36.09 billion yuan, a year-on-year increase of 0.4%; investment income was about 2.54 billion yuan, a year-on-year increase of 45.0%. The property insurance company's investment income significantly improved, and with a decrease in natural disasters compared to the same period last year, the comprehensive cost ratio dropped and net profit increased significantly. Investment Side In the first three quarters of 2025, the investment side of Sunshine Life and Property Insurance subsidiaries achieved total interest income + investment income + fair value change income of 20.76 billion yuan, a year-on-year increase of 26.8%. As of 1H25, SUNSHINE INS FVTPL stock assets accounted for 29.1% of total stock assets, while FVOCI stocks accounted for 70.9%. The proportion of stocks included in FVOCI is significantly higher than other peers: Ping An Insurance 62.1%, China Life Insurance 22.6%, China Pacific Insurance 33.8%, New China Life Insurance 18.8%, The People's Insurance 46.4%, CHINA TAIPING 33.6%. Q3 saw a significant increase in the secondary market, with the company including most of its stocks in FVOCI, fair value changes accounted for in OCI, only dividends accounted for in current investment income, leading to net profit not fully reflecting the performance elasticity brought about by the rise in equity.