Huachuang Securities: CHINA TAIPING (00966) reported a net profit increase of 90.3% year-on-year in the first half of the year and maintains a "Recommended" rating with a target price of HKD 26.7.

Huachuang Securities released a research report stating that CHINA TAIPING (00966) announced its interim results for 2026, showing that the groups net profit attributable to shareholders increased by 90.3% year-on-year to HKD 12.873 billion, and the net asset attributable to shareholders grew by 8.9% from the end of the previous year to HKD 103.638 billion, reflecting strong overall performance. The firm maintained its "Recommended" rating for the company, giving it a 2026 PEV of 0.4x, corresponding to a target price of HKD 26.7. Huachuang Securities believes that the company's asset side has benefited from the performance of the equity market, while the liability side has seized growth opportunities in the bancassurance channel, achieving rapid growth in new policies, which has led to impressive performance in the first half of the year. As the transformation towards participating insurance continues to advance and investment flexibility gradually releases, the companys valuation recovery has solid support. The report from Huachuang Securities mentioned that the growth of new business in the life insurance sector has mitigated the pressure on the value rate caused by the transformation of participating insurance. In the first half of 2026, the company's new business value (NBV) for life insurance grew by 1.4% year-on-year to HKD 6.268 billion. Among these, the individual and bancassurance channels grew by 9.4% and 17.5% year-on-year, respectively, with the combined new premium from long-term insurance across the three major channels increasing by 11.2% year-on-year, which somewhat offset the decline in NBV margin. Huachuang Securities anticipates that the downward trend in the value rate is mainly due to the transformation of participating insurance, with participating insurance accounting for 97.8% of first-year premium income in long-term insurance during the reporting period, an increase of 10.7 percentage points year-on-year, indicating a continued deepening of the liability-side transformation. Property insurance premiums showed steady growth, and the combined operating ratio (COR) was slightly affected by market conditions. In the first half of the year, original premiums for property insurance grew by 1.4% year-on-year, and the combined cost ratio (COR) rose by 1.3 percentage points to 98%, mainly due to factors related to expenses, although overall underwriting profitability was maintained. By region, domestic property insurance premiums increased by 5.9% year-on-year, with the mainstay auto insurance and non-auto insurance growing by 4.7% and 6.1% year-on-year, respectively; performance in the overseas market was mixed, with favorable optimization in COR for Taiping Hong Kong and Taiping Singapore. Investment income increased significantly, with the proportion of fund allocation continuing to rise. As of the end of the first half of 2026, the groups investment assets reached HKD 1,941.5 billion, an increase of 11.4% from the end of the previous year. The downward shift in the interest rate center continues to suppress net investment yield; however, equity assets contributed good excess returns, with the investment yield of the groups FVTPL secondary equity assets reaching 14.5% in the first half. During the period, the groups net and total investment yields (annualized) were 2.85% and 5.21%, respectively, changing by -0.26 and +2.53 percentage points year-on-year; the overall investment yield (not annualized) was 2.98%, an increase of 1.12 percentage points year-on-year. In terms of allocation structure, bonds accounted for 73.7%, down 2.4 percentage points from the end of the previous year; stocks and funds accounted for 18.1%, an increase of 1.5 percentage points from the end of the previous year, mainly due to the increased proportion of funds.