稳健的第一季度CoR交付；海外扩张迎来第二增长曲线

yields to a second growth trajectory PICC P&Cbeat in1Hearnings, with net profitlifting32.3% YoY to RMB 24.5bn,translatinginto4.1% rise in 2Q25, propelled by a double play of underwriting profit(+45%) and net investment results (+62%). CoR dropped 1.4pct YoY to 94.8%, withcomprehensive expense ratio down 3.1pct YoY to 23.0%, offset by the loss ratioticking up by 1.7pct YoY to 71.8%, outperforming major peers as Ping An/CPIC/Sunshine/ZhongAn/TPI’s CoR at 95.2%/96.3%/98.8%/95.6%/95.5%.Wesee auto/non-auto CoR improved by 2.2pct/0.1pct YoY to 94.2%/95.7% in 1H25,well met the guidance ofCoR less than 96%/99% set by themgmt.at year-start.Net asset value jumped 7.9% from FY24, thanks to the climb of retained earnings(+24%) and reserves (+10%). ROE enhanced to 9.0% in 1H25, up by 1.3pct YoY.Catalysts ahead may include1) theIntegration of Reporting and Operationsfornon-auto insurance business is expected to implement by 4Q25, which couldfurther edge up profitability; 2) auto insurance going overseas has beenlaunchedamid strong momentum of NEV export.Given improved UWefficiency,we raise our FY25-27E EPS estimates to RMB1.68/1.83/2.04,up4%/4%/7%withour new TPofHK$21.6, implying 1.6x FY25E P/B. Maintain BUY. Target PriceHK$21.60(Previous TPHK$15.80)Up/Downside15.1%Current PriceHK$18.76 China Insurance Nika MA(852) 3900 0805nikama@cmbi.com.hk Auto/Non-auto CoR improved bydisciplinedexpense controls.In 1H25,CoRimproved 1.4pct YoY to 94.8%, implying 2QCoR at 95% as we estimate.Comprehensive loss/expense ratio was up 1.7pct/down 3.1pct YoY to 71.8%/23.0%. Auto/non-auto CoR was 94.2%/95.5%, down 2.2pct/0.1pct YoY,drivenby effective expense controls partially offset bytick-upofclaims.Auto:expenseratiodropped4.1pct YoY to 21.1%, a record low,indicatingthe insurer’s strongbargaining powerinpricing and cost efficiency. Claimsratio edged up 1.9pctYoY to 73.1%.Non-auto:claims/expense ratio was up 1.5pct/down 1.6pct to69.8%/25.9%. The expense improvement (-1.6pct) waslowerthan that of autoinsurance(-4.1pct) due toa higher mix of policy-oriented business.Corporatebusiness CoR enhanced 3.2pct YoY to 95.1%,showcasing improvedoperatingefficiency. A&H/agriculture/liability/commercial property CoRwas at 101.8%/88.4%/103.6%/90.1%/88.6%,+1.9pct/-0.6pct/-0.4pct/-9.5pct/+1pct YoYin 1H.CoRoutlook:We think the extendedIntegration of Reporting and Operations(“报行合一”)to non-autoinsurancepossibly to implement in4Qcouldenhancedisciplined expensemanagementacrosslines, and significantly improve non-auto CoR in FY26E.We revisedownour FY25E CoR forecast to 97% (prev.97.1%), with auto/non-auto CoR to 95.8%/99.0% (prev.95.9%/99.0%). Source: FactSet Auditor: Deloitte Investment outperformed by capturing the upturn of stock market.Totalinvestment assets grew 5.2% from year-start to RMB711bn, with listed sharesincreased RMB16.5bn in 1H25 vs. FY24. Of which, OCI/TPL stocks comprised56%/44% of the increment, with the balances up 24%/75% from end FY24. In1H25,dividend income rose 7.2% YoY to RMB3.3bn,driven by the part fromOCIshares(+12%) offset by that of TPL stocks (-17%). Realized gains from TPLequitiessurged 18.2x YoY to RMB2.1bn, indicating a good catch of the insurer’sasset allocation strategy tothe upturn of A-share stock market in 1H. Lookingahead, we expect a more balanced investment portfolio could benefit the insurerbysteadilyincreasing thenet investment income, whilechanges infairvaluecouldtakepressure in 2H25E, given a high baseof stocks and bonds. Related reports: 1.PICC P&C(2328 HK)-1Q25 CoRoutperformed, Apr 15, 2025 2.PICC P&C (2328 HK)-Optimized CoRguidance beat expectations, Apr 1, 2025 3.PICC P&C (2328 HK)-3Q CoR missdragged by non-auto claims, Oct 31 2024 4.PICC P&C (2328 HK)-CoR sequentiallyimproved turning to positive 2Q net profitgrowth; first interim dividend in place, Aug30,2024 Valuation:The stock is trading at 1.4x FY25E P/B, with 3yr average ROE at14%and 3.9%yield.We upgraded our EPS forecasts in FY25-27E toRMB1.68/1.83/2.04 (previous: RMB 1.62/1.76/1.91) in accordance with better-than-expected UW profitability and investmentresultsin 1H, and a better CoRto 97% (prev. 97.1%) given improved underwriting mix of non-auto lines andstrengthenedcapability on risk prevention and cost control. Maintain BUY, withour new TP at HK$21.6 based on P/B-ROE,whichimplies 1.6x FY25E P/B. 5.PICC P&C (2328 HK)-1Q catastropheinduced claims fully released; FY24 CoRguidance sustained; exp. >40% payout,May7, 2024 6.PICC P&C (2328 HK)-Non-auto CoRbetterthan expected;sustain 40%+payout innext two years, Apr 2, 2024 7.PICC P&C(2328 HK)-Expect FY23ECoRguidance met; underwriting of NEVsandindividual A&H to drive new growthFeb 5,2024 Key risks:1) worse-than-expected catastrophic losses in 3Q25 that weigh onCoR; 2) weaker-than-expectedauto premium growth and overseas expansion;3) heightenedequitymarketvolatilities,and sharp declines in interest rate,etc. Highlight in earnings call: 1. Progress on theIntegration of Reporting and Operationsf