CICC has maintained its "Outperform Industry" rating on Sunshine Insurance (06963). The company currently trades at 0.3x 2026 estimated price-to-embedded value (P/EV). Based on adjustments to the investment portfolio forecast, CICC revised the 2026 estimated earnings per share (EPS) to 0.57 yuan and introduced a 2027 estimated EPS of 0.65 yuan for the first time. The target price remains unchanged at HK$5.55, corresponding to 0.4x and 0.3x 2026/2027 P/EV and implying 50% upside potential. Key points from CICC are as follows:
Sunshine Insurance's 2025 results exceeded market expectations. The group's net profit attributable to shareholders increased by 15.7% year-on-year to 6.31 billion yuan, outperforming market expectations, primarily due to a more favorable effective tax rate. The life insurance new business value (NBV) grew by 48.2% year-on-year to 7.64 billion yuan.
New life insurance business continued its strong growth momentum, with interest rate risk improving. The company's first-year premiums in 2025 increased by 47.3% year-on-year to 45.1 billion yuan, supporting the robust NBV trend. The new business value margin based on first-year premiums was 16.9%, largely flat compared to the previous year. The contract service margin (CSM) rose by 13.3% year-on-year to 57.62 billion yuan. The sensitivity of NBV to a 50 basis points decline in interest rates improved by 17.0 percentage points from the beginning of the year, indicating further mitigation of interest rate risk.
The property and casualty insurance business structure was optimized. In 2025, after excluding surety insurance, Sunshine P&C's combined ratio was 98.9%, down 1.0 percentage point year-on-year, achieving an underwriting profit of 490 million yuan, a 595.7% increase year-on-year.
Embedded value and net assets grew. The group's embedded value at the end of 2025 increased by 4.3% from the start of the year to 120.78 billion yuan. Net assets attributable to shareholders stood at 58.2 billion yuan. The company adjusted the accounting reserve liability discount rate to the spot rate at the end of 2025, with the impact recognized on a one-time basis.
The company's dividend per share was 0.19 yuan, essentially unchanged from the previous year. This is viewed as a balanced approach considering capital market conditions and the interest rate environment, aiming to ensure long-term healthy business development and normal investment activities. Looking ahead, dividends are expected to maintain steady growth.
Risks include slower-than-expected growth in first-year premiums, fluctuations in interest rates and capital markets, and policy uncertainty.
Comments