Analyst Ken Shih of DBS maintained a Buy rating on China Life Insurance Co (CILJF – Research Report), retaining the price target of HK$19.00.
Ken Shih has given his Buy rating due to a combination of factors including China Life Insurance Co’s strong financial performance and strategic investment decisions. The company reported a significant increase in net profit, driven by positive operating variances in health and medical insurances, as well as gains from interest rate movements. Additionally, the insurer’s value of new business (VNB) showed growth, aligning with expectations despite a slightly slower start.
China Life’s asset liability management has seen improvements, reducing the asset-liability mismatch and supporting capital resilience. The company’s flexible and prudent investment strategy, which includes increasing allocations towards long-duration government bonds and high-dividend yield stocks, has resulted in strong investment gains. Despite some challenges in the industry, such as a shift in product mix and a lower long-term investment return assumption, the outlook for VNB growth remains positive. These factors, combined with a sufficient interest spread buffer, underpin the Buy rating, although risks such as market competition and economic conditions are noted.
Shih covers the Financial sector, focusing on stocks such as Manulife Financial, AIA Group, and China Life Insurance Co. According to TipRanks, Shih has an average return of 9.8% and a 61.82% success rate on recommended stocks.