UBS: China Life Insurance (02628) target price raised to HK$42, optimistic about the growth of bank insurance channels and the trend of deposit migration.

UBS released a research report stating that it has significantly raised the target price of China Life Insurance (02628) from 29 Hong Kong dollars to 42 Hong Kong dollars, maintaining a "buy" rating. This upward adjustment is mainly based on three major reasons: the improvement of the prospects for new business value growth, favorable macro conditions driving the upward revision of embedded value forecasts (raising the embedded value forecast ratio for its life insurance business from 0.45 times to 0.6 times), and updating the valuation benchmark to 2026. The bank pointed out that China Life's current valuation is equivalent to 0.5 times the future 12 month stock price to embedded value and 1.22 times the price-to-book ratio, making the valuation attractive. It reiterates that China Life is a major beneficiary of mainland deposits "moving house" and the trend of rising stock markets. The bank's analysis shows that China Life Insurance's new business value is expected to increase by 35% in 2025, but compared to the 42% growth in the first nine months, the growth momentum weakened in the fourth quarter of last year. This is mainly because some demand was released ahead of the price reduction at the end of August, and some provincial-level branches are preparing for a strong start in 2026 after achieving their annual targets. UBS believes that this preparation will drive the company to achieve strong new business growth in January, especially in terms of bank insurance channels.