Daiwa Research raised its target price for Ping An Insurance (02318) to HK$88 from HK$80 and upgraded its rating to "hold" from "sell", given its recent share-price pullback.
The research house said Ping An's VNB margin rose 5.7pp in 1H. It pointed out that such magnitude should have been well expected given Ping An has been talking about "de-emphasising jumpstart" since 4Q 2018. Meanwhile, long-term protection business contribution to VNB was further squeezed by 7pp to 60% in 1H, versus 70% or above during 2015-17.
Daiwa is more concerned about the slowing VNB momentum in the core life insurance business as a result of the group-level strategy shift, evidenced by the decline in agency long-term protection VNB.
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