Goldman Sachs lowered its target price for New China Life Insurance (NCI)(01336) to HK$40 from HK$49 and downgraded its rating to "neutral" from "buy".
The research house said NCI is up 10% year-to-date, underperforming H-share peers (15%) but outperforming the HSCEI index (4%). Goldman noted that this underperformance was mostly after 1H results.
More importantly, it noted that NCI reported a decline in agent productivity and lower margin, in both the agency and the bancassurance channels. These represent a significant deviation from the previous focus on agent quality and protection-product sales.
Goldman reduced its 2019/20/21 NBV by 18%/22%/25% for NCI. It raised FY2019 earnings by 19% to reflect one-off tax refund in 1H and fine-tuned FY2020/21 earnings by +1%/+2%.
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