Nomura expects PICC P&C (02328) to deliver a combined ratio (COR) of 97.8% for 1Q-3Q 2019, implying a combined ratio at 98.3% for 3Q, compared to 102.7% for 3Q 2018.
The research house thinks the strong year-over-year combined ratio improvement should be mainly due to the improving auto insurance profitability, as the tight counter-cycle auto insurance regulation is paying off.
For its non-auto business, Nomura expects slight y-y combined ratio deterioration, due to the negative impact of African swine fever. In addition, Nomura noted the increased industry competition for the non-auto business in FY2019, which leads to increased underwriting pressure for non-auto business.
It maintained its target price of HK$11.12 and a "buy" rating.
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