4Q净亏损受公允价值缩水拖累；预计股息支付率增长31.7%

China Life (2628 HK) 4Q net loss dragged by fair value contraction;DPS rose 31.7% ahead of expectations ahead of expectations ChinaLifereported FY25 results, with net profit rising 44.1% YoY to RMB154bn,translating into anetloss of RMB13.7bn in 4Q25 due toenlargedfair valuelossesagainst the backdrop of turbulent stock and bond marketsoverthelast quarter. Netasset value climbed16.8% YoY to RMB595.2bn, and ROE rose 6.2pct YoY to27.8%. DPS was RMB0.86per share, up 31.7% YoY, ahead ofourexpectationswhich implied a payout of 15.7% (FY24: 17.2%). VNB jumped 35.7% YoY toRMB45.8bn,underpinnedbygrowthinbothagency (+25.5% YoY,86% mix) andbancassurance andother channels(+1.69x YoY,14% mix). EV was up 4.8% toRMB1.47tn, aided by positive investment variance (+RMB 67.3bn)butpartiallyoffset by negative market value adjustment due to fair value losses on debtinstruments (-RMB96.2bn). Total investment asset rose 12.3% YoY to RMB7.42tn Target Price(Previous TPUp/DownsideCurrent Price China InsuranceNika MA(852) 3900 0805nikama@cmbi.com.hk 4Qnet loss dragged by fair value contraction.China Life’s netinvestmentresults achieved RMB123.9bn in FY25, up 31% YoY,aided by realized gainsfrom TPL assets (RMB121bn vs. FY24:-RMB28bn)butoffset by reduced gainsfrom OCI debt instrument (-69% YoY) and TPL fair value change (-46% YoY).In 4Q25, net investment results recorded at negative RMB20.1bn (vs. 4Q24:+RMB2.3bn) dragged by fair value contraction amid heightened volatilities inequityand bond markets during the last quarter. Insurance service result wasRMB64.9bn inFY25, up by 132% YoY, with insurance service expense (ISE)down 17.6% YoY to RMB148.7bnowing toa rising yield (+21bps) in 2H25.Reversals of losses on onerous contracts,a key ISE component, significantly Shareholding Structure dropped to RMB4.98bn (FY24: RMB390.4bn) thanks to the rising discount ratefor VFA contracts that refers to the spot interest rate. DPS jumped 31.7% YoY NBV saw increaseof 36% YoY with agency still the core contributor.InFY25, NBV rose 35.7% YoY to RMB45.8bn underpinned by growth in agency(+25.5% YoY, 86% mix) and bancassurance & other channels (+1.69x YoY,14% mix). FYP grew 9.3% YoY to RMB234bnwith agency/bancassurance/group & others each making up 47%/25%/28%.NBV margin (FYP basis)was19.5%byFY25, of which agency NBMgrew 9.3pct YoY to 35% as reported. Core equityscaled up to>RMB1.2tnwitha mix of 16.9%.Totalinvestment assets amounted to RMB7.42tn in FY25, rising 12.3% YoY, with debts/coreequities comprising 70.5%/16.9% in FY25 (FY24: 74.3%/12.2%). In 2H25, theinsurer increased RMB286bn in core equities (i.e. stocks + equity funds),representing 16.9% of total investment assets. FVOCI stocks increased 66%from 1H25 or 2.86x YoY to RMB232.4bn, driving the OCI/TPL stock mix to28%/72% in FY25 (FY24: 12%/88%). Mgmt. guidedthe effective asset-liabilityduration gap was <1.5yrs in FY25, leaving room for allocation to bonds onceseeing an upward movement in long-term interest rate in 2026.On the equity Auditor: KPMG Related reports: 1.3Q net earnings almost doubledon ahigh base,Nov3, 2025 2.2Q earnings dip could be short-term;DPS uptrend a bright spot, Sep 3, 2025 3.Profitbeat; net asset turned to positivegrowthforimprovedasset-liabilitymatching,May 2, 2025 attractive valuations, and scale up exposure to selective growth sectors.Valuation:The stock is trading at 0.4x FY26E P/EV and 0.9x FY26E P/B. Weroll forwardour estimates to FY28E,and adjust our FY26-27E EPS forecaststo RMB4.75/5.14 (previous: RMB4.41/4.95). We revise our TP to HK$33 (prev.HK$31), which implies0.52x FY26E P/EV and 1.17xFY26E P/B. Maintain BUY. 4.4Qslowdownasexpected;DPSexceeded >50%,Mar 28, 2025 5.4Q net profit could decline despitebetter capital market, Jan 27, 2025 6.3Q NPAT boosted by net fair valuegains;expect resilient full-year NBVupswing, 5 Nov, 2024 7.Strong lift in banca NBV margin;investmentincome may continue torebound in 2H24, Sep 2, 2024 8.Highest VNB growth in years; net profitdecline narrowed on track, May 2, 2024 Key risks:1)prolonged low-interest rate environment and significantinterestrate shock; 2) heightened equity market volatilities; 3) slower-than-expected new Disclosures& Disclaimers Analyst Certification The research analyst who is primary responsible for the content of this research report, in whole or in part,certifies that with respect to the securities or issuerthat the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about the subject securities or issuer; and (2)no part of his or her compensationwas, is, or will be, directly or indirectly, related to the specific views expressed by that analyst in this report.Besides, the analyst confirms that neither the analyst nor his/her associates (as defined in the code of conduct issued by The Hong KongSecurities and Futures Commission) (1) have dealt in or traded in the stock(s) covered in this research report within 30 calendar days prior t