[ET Net News Agency, 24 July 2020] Morgan Stanley lowered its target price for PICC
Group (01339) to HK$2.9 from HK$3 and maintained its "overweight" rating.
The research house said the stock is down 22% year-to-date, underperforming life centric
names by 6ppts, despite an improving life and heath business, dragged mainly by its P&C
business and its recently announced management changes (with Chairman role vacant).
Life and Health are still aiming for double-digit VNB (value of new business) growth for
2020 after a strong 9% underlying growth in 2019.
Morgan believes the company still has more headroom to expand its sales force and
improve product and channel mix, which could support a higher-than-peers' growth.
Over the medium term, its quality transformation could create significant shareholder
value - implied Life & Health capitalization is still negative. The group's financial
performance used to lag its P&C subsidiary, however, its earnings and dividend growth has
started to accelerate and could outperform PICC P&C (02328) from now due to improving L&H
business and continued increase in payout. (KL)