Group OPAT back to double-digit rise; expect CSM to return to positive growth in 2026E

Ping An (2318 HK) Group OPAT back to double-digit rise; expectCSMtoreturn to positive growth in 2026E Ping An delivered robust FY25 results with Group OPAT backtodouble-digitgrowthof10.3% YoY to RMB134.4bn, translating to 35.3% YoY rise in 4Q25,slightly lower than our estimate of RMB135.9bn (link). Group NPATreported atRMB134.8bn in FY25, up 6.5% YoY, modestlyhigher than our estimate ofRMB133.1bn. The gapbetweenOPAT and NPATinvolvednon-operating itemsincl. 1) RMB9.06bninshort-terminvestmentvariance from L&H business (vs.FY24:-RMB3.9bn) and 2) RMB8.6bninone-off losses from thecombinedeffectof consolidation of subsidiaries and sale of Autohome,and revaluation losses onhigher value of H-share convertible bonds. By segment, L&H/P&C/PAB/AM OPATwas+2.9%/+13.2%/-4.2%/+68.2%YoY in FY25 and Fintech OPAT turnedpositive to RMB249mn. DPS rose 5.9% YoY to RMB2.7, in line withBloombergconsensus,whichimplies an OPAT payout of 36.4% (FY24: 37.9%). NBV jumped29.3% YoY to RMB36.9bn, with bancassurance NBV surging 138% YoY toRMB9.4bn (26% mix). CSM balance modestlyfellby 0.8% YoYbutheadedtowards positive growth trajectory. According to management,if excl. interest ratemovements, the metric realized aYoY increase in the year. Maintain BUY, withour TPbased on SOTPat HK$90 (unchanged)which implies0.9x FY26E P/EV. Target PriceHK$90.00Up/Downside51.8%Current PriceHK$59.30 China Insurance Nika MA(852) 3900 0805nikama@cmbi.com.hk Stock Data L&H OPAT rosethanks toimprovingoperating variance and investmentresults. In FY25,L&HOPATclimbed7.5% YoY to RMB103.3bn, with 2HL&HOPAT rising 12.5% YoY to RMB48.6bn,supported by more-than-doubledoperatingvariance gains and investment service result(30%mix vs.2H24/1H25: 17%/24%). CSM release amountedtoRMB68.2bn, down 4.2%YoY with the decline in 2H narrowed to 3.0% YoY (1H25:-5.2% YoY). L&Hoperating variance and others rose 17% to RMB9.4bn,reflecting disciplinedexpense control and improved claims and/or persistency experience amidstringent regulatory oversight. Investment service results rose 55.5% YoY toRMB27.3bn thanks to the surge in 2H at RMB14.4bn. NBVgrew29.3% YoYto RMB36.9bn with agency/bancassurance/telemarketing /group channelsrising 10%/138%/29%/down 33% YoY in FY25. With sustainedstrongNBVmomentum, we expect CSM balance to return to positive growth trajectory in2026E, supporting CSM release back to YoYincreasein 2H26E(CMBI est). P&C UWP almost doubled; COR down 1.5pct to 96.8%.P&Cauto/non-autopremium rose 3.2%/14.5% YoY to RMB230bn/RMB113bn (67%/33% mix).CoR was 96.8%, down 1.5pct YoY, with auto/non-auto CoR at 95.8%/99.1%,down 2.3pct/0.8pct YoY thanks to optimized costs in auto segment and profitgains from guarantee insurance. UWPwasRMB10.7bn, up 96.2% YoY drivenby auto, agriculture, and guarantee insurance,partially offset by liabilityandA&H segments. P&C net profit fell 2.8% YoY to RMB14.5bn due toa high baseforinvestment income. Looking ahead, we expect Ping An’s P&C to remainone of core drivers of Group OPATrisewith non-auto CoR to further improve. Auditor: Ernst & Young Related reports: 1.Bancafuelling NBV growth injumpstart sales; 4Q earnings could easeon growth stock corrections, 23 Jan 2026 2.China Insurance-Easing solvency riskfactors to steer insurance funds into long-term stockholdings, 8 Dec 2025 % of core equitiesin totalinvestment assetsroseto 19.2%,with OCI/TPLstocks at 57%/43%.Net/comprehensiveinvestment yield was 3.7%/6.3% inFY25,-0.1pct/+0.5pct YoY. Total investment assets reached RMB6.5tn, up13.2% YoY. Core equities (stocks + equity funds) amounted to RMB1.24tn, upby 118% YoY, making up 19.2% of total investment assets in FY25 (vs.FY24/1H25: 9.9%/12.6%). In 2H25, Ping An scaled upTPL and OCI stocksbyRMB192bn/RMB117bn, changing the mix ofTPL/OCIstocks to43%/57%(vs.1H25: 35%/65%). This enhanced equityexposure generatedfair value gainsandledtoincreasedcomprehensive investment income to RMB325bn (+22%YoY) on top of a high base. EV investment experience variance was up 37.3%YoY to RMB29.8bn, driving Group/L&H EV each up by 5.7%/11.2% YoY. 3.3Q earnings beat; improving businessqualitywith catalysts across-the-boardworth to expect, 31 Oct, 2025 4.1H25 a mixed bag: NBV beat whileOPAT in line, Aug 28, 2025 5.1Q25 NBV stayed robust lifting L&HOPAT back to positive growth, Apr 28,2025 Valuation:The stock is trading at 0.6x FY26E P/EV and 0.8x FY26E P/B, witha yield of 5.6%(CMBI est),the highest among peers. WeexpectL&H CSM balance and releaseto returntopositive growth trajectory in 2026E, whichcouldfurtherunleash L&H OPAT upside.Considering increasing equity marketvolatilities,we modestly revise down FY26-27EEPS by 1%/2% to RMB7.85/8.33 andintroduceFY28 estimates (Table).Maintain BUY, with ourTP atHK$90 (unchanged) based on SOTPwhich implies0.9x FY26E P/EV and 1.2xFY26E P/B.Our TPincludes1) 1.1x target P/EV for Ping An L&H; 2) 0.9x P/Bfor Ping An P&C; 3) 0.6x P/B for Ping An Bank; 4) 1.0x P/B for AM and otheroperations; and 5) HK$0.8 per share for online bus