[ET Net News Agency, 5 November 2019] HSBC Global Research raised its target price for
PICC P&C (02328) to HK$12 from HK$11 and maintained its "buy" rating.
The research house said PICC P&C is a well-managed pure play on China's high-growth
potential P&C market with a broad nationwide distribution network. Although motor rate
liberalisation has caused uncertainty, loss ratios have actually been better than expected
due to lower claims frequency, but higher commissions have pushed up expense ratios and
tax rates.
HSBC said Document 57 should ease pressure on commissions and tax rates. Meanwhile,
non-motor is growing faster than the motor and its underwriting profitability is
improving. HSBC's estimated a 14% ROE over the next five years, which is below its
historical average due to lower asset leverage. (KL)