Goldman Sachs: Gives China Life Insurance a "neutral" rating with a target price of 28.5 Hong Kong dollars.

Goldman Sachs released a research report stating that China Life Insurance (02628) has a neutral rating. The 12-month target price based on return on total assets is HK$28.5, corresponding to a 1.0x 2027 expected price-to-book ratio. Investor concerns mainly focus on sales prospects, potential disruptions in the banking-insurance channel by CKH HOLDINGS, investments, and dividends. China Life Insurance reiterated its target to achieve double-digit growth in new business value in 2026 and emphasized its competitive advantage in the banking-insurance channel. The strong performance of the stock market in the second quarter of 2026 has improved investment performance. For investors concerned about the base effect in the third quarter, China Life Insurance stated that attention should be paid to full-year profits, especially considering the lower base effect in the fourth quarter. Management also aims to reduce the volatility of earnings per share. Key points of the meeting: Growth in new business value China Life Insurance attributed the significant 75% year-on-year growth in the first quarter to an increase in the proportion of long premium period policies relative to the first quarter of 2025 and strong performance in the opening sales campaign. It is expected that the growth rate of new business value may slow down in the following quarters, mainly due to the high base effect; customer demand remains unchanged. Encouragingly, the strong growth momentum in the agent channel in the first quarter has continued into the second quarter. Thanks to the good performance achieved in the first quarter, agents were able to focus on selling protection-type products in the second quarter. In addition, China Life Insurance believes that insurance demand may improve as market sentiment improves, and the strong performance of the stock market will not pose a threat to insurance sales. Sales through banking-insurance channels China Life Insurance emphasized its leading position in the banking-insurance channel in large state-owned banks and city commercial banks. The strong growth in the number of effective bank branches and production efficiency in leading bank branches in the first quarter of 2026 reflects this advantage. The next strategic step is to strengthen cooperation with joint-stock commercial banks. Regulation of banking-insurance channels Regarding the more detailed regulation of channel fees in "Document 65", China Life Insurance stated that the sales through the banking-insurance channel in the entire industry may have been slightly affected in late June, but the impact is mainly concentrated in July and August. However, China Life Insurance pointed out that the company's products and fees already comply with the new regulations, and the expected impact is limited. China Life Insurance expects that after the implementation of "Document 65", the seven major life insurance companies will expand their market share, as they have competitive advantages in distribution, brand, and products. Investments The strong performance of the stock market in the second quarter has improved investment performance so far. Looking ahead, China Life Insurance points out that the comparison base in the third quarter is relatively high, but emphasizes that the base in the fourth quarter is much lower. The company believes that investors should focus on full-year investment performance and net profit. In addition, China Life Insurance welcomes the approval for insurance companies to participate in the southbound bond connect and notes that the market provides more attractive yields. Dividends China Life Insurance reiterated that dividends are an important performance evaluation metric for management, and the company's strong profit growth in recent years has led to a significant increase in dividends per share. Looking ahead, the company's profits fluctuate significantly under the IFRS 17 insurance accounting standard, but management will strive to reduce the volatility in dividends per share.