A research report from Huaxi Securities Co.,Ltd. indicates that ZA ONLINE (06060) possesses competitive advantages in China's internet property and casualty insurance sector, with profitability in its technology and banking segments showing continuous improvement. The firm is optimistic about the company's potential for further enhancement of its overall profitability in the future.
Based on the company's disclosed 2025 annual report data, previous profit forecasts have been adjusted. Insurance service revenue for 2026-2028 is now projected to be RMB 35.743 billion, RMB 37.631 billion, and RMB 39.702 billion, respectively. Net profit attributable to shareholders for 2026-2028 is estimated at RMB 1.190 billion, RMB 1.304 billion, and RMB 1.400 billion, respectively. Earnings per share (EPS) for the same period are forecasted to be RMB 0.71, RMB 0.77, and RMB 0.83.
The closing price of ZA ONLINE on June 4, 2026, was HKD 10.35 per share, which corresponds to a price-to-book (P/B) ratio of 0.56x, 0.53x, and 0.50x for 2026-2028. The 'Add' rating is maintained. Key points from Huaxi Securities Co.,Ltd. are as follows.
ZA ONLINE Releases 2025 Annual Report
In 2025, the company achieved a net profit attributable to shareholders of RMB 1.102 billion, representing a year-on-year increase of 82.5%. The adjusted net profit attributable to shareholders was RMB 1.800 billion, surging 198.3% year-on-year. Equity attributable to owners of the parent company reached RMB 25.449 billion, a 21.6% increase from the previous year.
The substantial year-on-year profit growth is primarily attributed to improved underwriting profitability in the insurance business, the turnaround to profitability of ZA Bank, and stable investment performance.
Insurance Segment: Premiums Show Steady Growth, Underwriting Profit Improves Significantly
In 2025, ZA ONLINE achieved total premiums of RMB 35.735 billion, a 6.9% year-on-year increase. In terms of premium composition by ecosystem, digital lifestyle/health/consumer finance/auto accounted for 44.7%, 35.5% (a year-on-year increase of 4.6 percentage points), 12.1%, and 7.7% (a year-on-year increase of 1.6 percentage points) of total premiums, respectively.
Looking at premium growth by ecosystem, auto ecosystem premiums grew 34.6% year-on-year to RMB 2.760 billion, with new energy vehicle insurance premiums surging approximately 206.2% year-on-year, accounting for over 28.3% of total auto insurance premiums. Health ecosystem premiums increased 22.7% year-on-year to RMB 12.682 billion, driven by a 456.1% surge in premiums for the inclusive "Zhong Min Bao" series products, which has become a new growth engine. Total premiums for innovative businesses within the digital lifestyle ecosystem reached RMB 6.568 billion, accounting for 41.1% and growing 37.2% year-on-year.
In 2025, ZA ONLINE achieved an underwriting profit of RMB 1.412 billion, a 42.5% year-on-year increase. Correspondingly, the company's combined ratio improved by 1.1 percentage points year-on-year to 95.8%, with the loss ratio improving by 1.2 percentage points to 57.1% and the expense ratio increasing by 0.1 percentage points to 38.7%.
By ecosystem: 1) The health ecosystem's combined ratio improved by 3.6 percentage points year-on-year to 92.1%, primarily benefiting from AI's comprehensive enhancement of marketing and operational efficiency, with the expense ratio decreasing by 6.7 percentage points. 2) Auto ecosystem: The combined ratio improved by 1.1 percentage points year-on-year to 93.1%, mainly due to refined operations and expense control under the "reporting and execution unity" policy. 3) Digital lifestyle ecosystem: The combined ratio remained stable at 99.9%.
Technology and Banking Segments: Banking Unit Turns Profitable, ZA Bank Achieves First Annual Profit
The company continues to deepen its "One AI" strategy, having served 500 million customers cumulatively and accumulated nearly RMB 100 billion in policy data, based on which it has independently built a multimodal corpus for business-related texts. In 2025, ZA Bank became the first digital bank in Hong Kong to surpass 1 million retail users.
Simultaneously, ZA Bank achieved its first annual profit, with net profit reaching HKD 17.27 million. Net income amounted to HKD 892 million, a 62.7% year-on-year increase, of which non-interest income was HKD 223 million, surging 277.9% year-on-year, primarily driven by investment and wealth management services.
Benefiting from economies of scale, ZA Bank's cost-to-income ratio improved significantly from 109.4% in the same period last year to 77.7%, which was one of the main reasons for achieving profitability. As of the end of 2025, ZA Bank's customer deposit balance grew 14.7% from the beginning of the year to approximately HKD 22.245 billion.
Investment: Total Investment Income Grows Substantially
Benefiting from the recovery in the capital markets, the company's total investment income from domestic insurance funds in 2025 was RMB 2.124 billion, a 59.1% year-on-year increase. Correspondingly, the company's total investment yield and net investment yield were 5.3% (up 1.9 percentage points year-on-year) and 1.9%, respectively.
As of the end of 2025, the total investment assets of the company's domestic insurance funds reached RMB 40.302 billion. In terms of asset allocation, the company seized opportunities in the equity market to increase allocations, with the proportion of secondary stocks and equity funds increasing by 3.1 percentage points from the end of 2024 to 9.1%.
Risk Factors to Consider
Potential risks include tightening internet insurance regulations; economic recovery falling short of expectations; intensifying industry competition; and capital market volatility.
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