[ET Net News Agency, 25 March 2020] Daiwa Research lowered its target price for China
Pacific Insurance Group (CPIC)(02601) to HK$22.75 from HK$28 and maintained its "hold"
rating.
The research house said CPIC's results conference call mainly discussed its dividend
policy, agency reform, and the COVID-19 impact. Daiwa noted that CPIC's robust dividend
yield of 6.4% is the second-highest among China insurers after PICC P&C's (02328) 7.1%.
However, Daiwa believes the dividend yield alone does not prompt an upgrade of the
stock, given its mild DPS growth outlook due to (1) a bleak interest-rate outlook, (2)
soft agency development trend, and (3) dividend payout still being related to accounting
profit, to some extent, which will likely be weaker than its OPAT (operating profit after
tax) over 2020-22. (KL)