UBS Raises Target Price for China Life (02628) to HK$29, Increases After-Tax Profit Forecast

Stock News
Oct 20

According to reports, UBS has announced that China Life (02628) is expected to report a favorable earnings surprise, with an estimated after-tax net profit for the first three quarters of this year anticipated to increase by 50% to 70% year-on-year, reaching between RMB 157 billion and RMB 178 billion, significantly exceeding market expectations. The after-tax net profit for the third quarter is projected to rise by 75% to 106% year-on-year, mainly driven by a substantial increase in investment income and a recovery in insurance services. Based on this earnings surprise, expanded asset management scale, and rising interest rates, UBS has raised its after-tax net profit forecasts for China Life for 2025 to 2027 by 79%, 23%, and 24% respectively. UBS has adjusted the target price for China Life from HK$27.4 to HK$29, maintaining a "Buy" rating. The firm estimates that the new business value (VNB) for the first three quarters will increase by 36% year-on-year, compared to a growth of 20% in the first half of the year, indicating strong momentum in the third quarter. Regarding dividends, although the after-tax net profit for the year is expected to show robust performance, the firm believes that dividends will not increase at the same rate, as the group's goal is stable dividend growth. If dividends are increased by 10% to 30%, the H-share dividend yield will reach between 3.4% and 4%.

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