[ET Net News Agency, 30 March 2020] Nomura lowered its target price for PICC Group
(01339) to HK$3.62 from HK$4.21 and maintained its "buy" rating.
The research house PICC's 2019 earnings beat but P&C underwriting missed, with dividends
the key positive surprise. Nomura expects auto business to remain very profitable, given
the balanced regulatory approach by CBIRC, and auto business may see even further, though
temporary, improvement in 1Q, as claims frequency declined amid the COVID-19 outbreak.
However, Nomura is concerned about credit guarantee business, and the worsening trend of
underwriting profitability may continue into FY2020, due to increased asset quality
challenges due to the COVID-19 outbreak, and thus Nomura increased its combined ratio
forecast by 1pp to 98.5% for FY2020. (KL)