DBS analyst Iris Gao has reiterated their bullish stance on 1ZO stock, giving a Buy rating on June 3.
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Iris Gao’s rating is based on a combination of factors that highlight the potential for ZhongAn Online P & C Insurance Co., Ltd’s growth and profitability. The company has demonstrated strong premium growth, particularly in health and auto insurance sectors, which is expected to continue outperforming the industry average. Although there is a slight increase in the combined ratio due to a shift in product mix, the long-term outlook remains positive with improving persistency ratios and a reduction in marketing expenses.
Additionally, ZhongAn’s significant stake in ZA Bank, which has shown promising financial performance and potential IPO value, adds hidden value to the company that is not fully reflected in its current stock price. The insurer’s strategic investment adjustments, such as extending bond durations and reallocating towards high-dividend stocks, are expected to enhance investment yields as interest rates decline in China. These factors, combined with the company’s innovative approach in integrating technology into its operations, underpin the Buy rating despite some challenges like competition and macroeconomic risks.
In another report released on June 3, CMB International Securities also maintained a Buy rating on the stock with a HK$20.40 price target.