Bank of Communications International has updated its profit forecast for China Life (02628). The company's net profit attributable to shareholders is projected to grow by 44.1% year-on-year in 2025, with new business value increasing by 35.7% year-on-year. Poor investment performance in the fourth quarter of 2025 does not alter the long-term operational trend. The bank forecasts that new business value will rise to 500 billion yuan by 2026. The target price has been raised to HK$33, corresponding to a 2026 target price-to-embedded value ratio of 0.6 times, with a Buy rating maintained. Key points from Bank of Communications International are as follows:
The company recently released its 2025 performance, achieving operating revenue of 6,156.78 billion yuan, a year-on-year increase of 16.5%. Net profit attributable to shareholders reached 154.078 billion yuan, up 44.1% year-on-year, continuing high-quality growth on top of the high base of 108.9% year-on-year growth in 2024. Benefiting from improved value contributions from channels such as individual insurance and bancassurance, full-year new business value reached 45.75 billion yuan, a 35.7% year-on-year increase. The company's total investment yield rose to 6.09%, an increase of 59 basis points year-on-year. Although investment losses from the underperformance of some investment targets since the fourth quarter of 2025 have had a certain drag on overall performance, the impact is relatively limited considering the long-term nature of the life insurance company's main business growth. Management further reiterated at the results presentation that it will accelerate the construction of a world-class life insurance company with Chinese characteristics and judged that the next five years will be a "golden opportunity period" for the company's development, supported by factors such as demographic changes and the development of the insurance industry during the 15th Five-Year Plan period.
The bank has updated its forecasts for 2026-2028, anticipating steady growth in the scale of the life insurance business over the next three years. In particular, with the accelerated launch of new products in health and elderly care, premium income is expected to maintain a year-on-year growth rate of over 5%. New business value is expected to continue its high growth on the high base of 2025, potentially increasing to 500 billion yuan in 2026. With continuous improvement in digital operations and risk control capabilities, coupled with the deep implementation of cost reduction and efficiency enhancement, profitability is expected to remain at a good level after overcoming short-term investment disturbances. Overall, as a leading benchmark in China's life insurance market, the company is expected to maintain a profit growth rate that outpaces its peers and be among the first to benefit from the industry's medium to long-term profit improvement and valuation recovery process.
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