Bank of America Securities: raised ZA Online (06060) earnings forecast by 5% for this year and next year, target price increased to HK$16.1

Bank of America Securities released a research report stating that it has raised profit forecasts for ZA ONLINE (06060) by 5% for the next two years and raised the target price from HK$15.3 to HK$16.1, equivalent to a forecast price-to-earnings ratio of 0.9 times, reiterating a "buy" rating. The report indicates that with the decline in comprehensive cost ratios and other costs, as well as contributions from Hong Kong operations, the company's profit is expected to increase to 1.5 billion yuan in the next three years, compared to 1.1 billion yuan last year. The report also points out that the company's net profit grew by 83% last year on a low base in 2024. Core business growth is stable, with premium income increasing by 7% year-on-year. The comprehensive cost ratio improved by 1.1 percentage points to 95.8% last year, mainly due to a 2.7 percentage point decrease in loss ratio for the life consumption business to 65.3%. Total investment income increased by 59% year-on-year driven by the improvement in the mainland bond and stock markets, and the total investment return rate rose to 5.3%, an increase of 1.9 percentage points year-on-year. The main negative impact came from a provision of 700 million yuan for investments in ZhongAn International. Management believes that this provision is a one-off.