保诚集团：孤独的长跑

Restricted - External PRU.L/PRU LNOVERWEIGHTUnchangedEuropean InsurancePOSITIVEUnchangedPrice TargetGBp 1090lowered -4% from GBp 1130Price (20-May-25)GBp 863Potential Upside/Downside+26.3%Source: Bloomberg, Barclays ResearchMarket Cap (GBP mn)22471Shares Outstanding (mn)2603.28Free Float (%)99.8952 Wk Avg Daily Volume (mn)5.5Dividend Yield (%)2.06Return on Equity TTM (%)12.94Current BVPS (GBp)658Source: BloombergPrice PerformanceExchange-LSE52 Week rangeGBP 8.86-5.95Source: IDCLink to Barclays Live for interactive chartingEuropean InsuranceLarissa van Deventer+44 (0)20 3555 1527larissa.vandeventer@barclays.comBarclays, UK 1.0x P/EV the next hurdle before fundamentals to become a key driver: Our calculationssuggest that Pru's P/TEV ratio was c.0.57x lower than that of AIA, on average under TEV, fromFY20 to FY24 (Pru's average being 0.99x vs AIA at 1.57x). Thatdifferencehas narrowed to c.0.38x,with Pru trading at 0.89x P/TEV. We believe that the current direction of news flow from Pru andprice momentum should besufficientto carry the share price to 1.0x P/TEV, suggesting c.13%upside from current pricing levels. From an earnings perspective, Pru's PE ratio is currentlylagging that of AIA by c.12%.Afterthese psychological hurdles are cleared, we expect themarket to increasingly focus on fundamental metrics and consistent delivery, which will taketime to evidence and may slow the pace of further rerating, however we remain confident inPru's fundamental drivers.China-UStarifftrajectory remains uncertain: Our Barclays equity strategists view thepotential impact of the recent agreement between China and the US ontariffsas potentiallypositive for certain stocks. However, our China economic team's view is that it reduces theurgency for new stimulus and that thetarifftrajectory remains uncertain. They seesofterconsumer sentiment as a potential downside risk. Still, for the near term we expect themomentum from the catch-up trade and technical support from the share buy-back to supportthe share price.Reduce price target by 4% to 1090 p/share from 1130 p/share to reflect FX changes; remainOverweight: We update our GBPUSD conversion rate to spot. We reiterate our Overweightrating with potential upside of c.26% from the price of 863p at COB on 20 May 2025.PRU.L: Financial and Valuation Metrics EPS (USD Cents)FY Dec20232024202520262027EPS88.95A90.31A103.01E111.79E127.98EPrevious EPS88.95A90.31A103.01E111.79E127.98EConsensus EPS89.00A90.00A101.40E118.60E134.90EP/E13.012.811.210.39.0Consensus numbers are from Bloomberg received on 21-May-2025; 12:50 GMTSource: Barclays Research2 A catch-up trade with disparate correlationshistoricallyPru's share price is up 47% YTD. The stock has meaningfully outperformed the Hong Kong-listedshare prices of pan-Asian peer AIA, three large cap Chinese insurers and the HSI YTD. Thequestion is therefore what isdifferentiatingPru vs its peers this year, and how long this maycontinue.FIGURE 1. Pru share price vs AIA, large Chinese insurers and the HSI (31/12/2024 = 100; YTD)All pricing based on the Hong Kong listings, data to COB on Wednesday, 21 May 2025Source: Barclays Research, BloombergA catch-up trade...When we consider historical share price performance of the pan-Asian and large Chineseinsurers, it seems that Pru tends tosufferimmediately alongside peers on negative China macronews, but not always benefit from positiveshiftsto the same extent. In our view, Pru seems tobe a catch-up stock in 2025 to some extent:•China eased its Covid restrictions on 7 December 2022. As life insurance in Asia tends to bemainly retail, insurance was not an obvious choice for immediate investment in a Chinarecovery, and most of the insurance stocks reflected that sentiment. In 2023, Pru's share priceperformance was comparable to AIA, China Life and Ping all, all down -19 to -28% vs the HSIat -14% (CPIC being the exception at -4%).•In 2024, Pru underperformed AIA by 13ppts, China Life by 81ppts, Ping An by 67ppt, CPIC by96ppts and the HSI by 45ppts. Most of this performance gap arose when China announcedfiscal stimulus in September 2024. In the two weeks from 20 September to 4 October, AIArerated by 32%, while the three Chinese insurers rerated by 53% to 54%. The HSI rerated by26%, while Pru was up 9%. We believe that a reason for thisdifferentialis that the operationsof the three Chinese insurers are predominantly based in mainland China, while China drove24% of AIA's operating earnings in 2024 vs 8% for Pru. Therefore, although Pru appears tohave borne the full brunt of the insurance sector lag in 2023, the stock did not benefit to thesame extent from China fiscal stimulus in 2024. 4 FIGURE 3. Annual share price returns of Pru, AIA, large Chinese insurers, and correlations to the HSIAnnual share price returnCorrelationPing AnCPICHSIPru vsAIA6%5%-3%0.72-39%-27%-14%0.45-2%-12%-15%0.67-28%-4%-14%0.9340%69%18%0.42(0.47)5%-3%19%0.58-33%6%-15%0.87All pricing based on the Hong Kong listingsSource: Barclays Resea