二季度盈利下滑可能是短期现象；每股股息上涨是一大亮点

2Qearnings dip could be short-term;DPSuptrend a bright spot China Life reportedmixed1H25results with net profit up by 7% YoY to RMB40.9bn,implyingthat2Q’s bottom-line retreated 31% YoY (vs. 1Q25: +40% YoY), draggedby increased insurance service expense (ISE) due to a downward-trending interestrate in 2Q25 (-17bps vs. 1Q25/2Q24: +14bps/-10bps). ISE rose 42% YoY to RMB60.6bn in 2Q25, as a result ofincreasinglosses on onerous contracts (+33% YoY).2Q insurance service results ended at a RMB 7.8bn loss, down 175% YoY.Despitequarterly fluctuations,we expect the volatility on ISE to ease in 3Q/2H25E givena rebound in China’s 10Y govt. bond yield(upby 17bps in 3Q-to-date),and theplungein interest rate in 4Q24 (-51bps QoQ)leading to a low base forinsurance service resultrecoveryin 2H25E, in our view.DPS grew 19% YoY toRMB 0.24, outpacing net profitgrowth. NBV grew 20.3% like-for-like in1H25 to RMB28.5bn, driven by bancassurance surge(+179%YoY) amid margin expansion.BancassuranceFYP surged 111% YoY in 1H25,aidingthe NBV uptrend. AgencyFYP fell 22% YoY in 1H25, which we think could be due to a product mix change topar sales (>50% agency FYRP). Core equities edged up 1.4pct from FY24, withinvestment income bolstered by realized spread income (+2.7x YoY).Consideringimproved UW structure and optimized asset allocation to match liability features,weraise our FY25E-27E EPS forecasts by5%/4%/8% to RMB 2.99/3.23/3.67, andraiseourTPtoHK$29.0,which implies0.5x FY25E P/EV.Maintain BUY. Target PriceHK$29.00(Previous TPHK$20.00)Up/Downside24.3%Current PriceHK$23.34 China Insurance Nika MA(852) 3900 0805nikama@cmbi.com.hk Stock Data NBV uptick in-line,driven by bancassuranceoutperformance.In 1H25, NBVgrew 20.3% like-for-like to RMB 28.5bn with agency/bancaand otherchannels’NBVrising 10%/ 179% LFLtoRMB 24.3bn/4.2bn, making up 85%/15% of total.Bancassurance FYP surged 111% YoY, with FYRP up by34% to RMB 17bn,compensating for 22%/24% YoY decrease in agency FYP/FYRP respectively. Wethink the agency premium slowdown was due to the product transformation to parpolicies, and channel optimization for agent training. Total number of agentswaslargely stable at 592kat end-Jun,-0.3%/-3.7% QoQ/HoH. Agency par FYRP madeup over 50%of total FYRP, in line with key peers. NBV margin expanded 2.9pctYoY to 17.7%, mainly driven by a 9.2pct LFL increase of agency NBVM to 32.4%(FYP basis) in 1H25. Other channel NBV margin couldhavemorethandoubledonourestimate.Given a more balanced UW structure focusing on par andprotection-typedpolicies, we project FY25E NBVriseto stayat high-teens. Core equities enhanced; investment income boosted by spreadincome. In1H25, investment assetsincreased7.8%HoHto RMB 7.1bn, on par with GWPgrowthof7.3% YoY to RMB 525bn, a recordhalf-yearscale. NIY/TIYdipped 0.3pct/0.3pctYoY to 2.78%/3.29%.Core equities(incl.stocks and equity funds)represented13.6%of total balance, up 1.4pct HoH to RMB971bn. OCI stocks morethandoubled to RMB140bn in 1H25 (2% mix, vs. FY24: 0.9%). The rising high-yieldstock balance contributedto a79% YoY surge of OCI stocks’ dividend income. TPLstocks and equity funds comprised 11.6% of total funds, with each balance up9%/15% vs. FY24, which contributed to the 2.7x YoY surge in spread income. Auditor: KPMG Related reports: 1.China Life (2628 HK)-Profit beat; netassetturned to positive growth forimprovedasset-liability matching,May 2,20252.China Life (2628 HK)-4Q slowdown asexpected; DPS exceeded >50%,Mar 28,20253.China Life (2628 HK)-4Q net profitcoulddecline despite better capitalmarket, Jan 27, 2025 (link)4.China Life(2628 HK)-3Q NPATboosted by net fair value gains; expectresilient full-year NBV upswing, 5 Nov,20245.China Life (2628 HK)-Strong lift inbanca NBV margin; investment incomemay continue to rebound in 2H24M, Sep2, 20246.China Life (2628 HK)-Highest VNBgrowthin years;net profit declinenarrowed on track, May 2, 20247.China Life (2628 HK)-4Q net lossmarkedly narrowed;VNB grew in low-teens despite revised EV assumptions,Apr 8, 2024 Valuation:The stock is trading at 0.39x FY25E P/EV or 1.1x FY25E P/B, with ayield at 3.4%.We think the insurer’s 2Q profit dip could be a short-termimpactonshare price, and is likely to rebound in 3Q/2H25Easinterest rate movementeases. We remain prudent on EPS forecasts vs. consensus, given a highinvestment base of fair value gainsandstock market rally in 2H24. We raise ourFY25-27E EPS estimates to RMB 2.99/3.23/3.67, up5%/4%/8%, and ournewTPbased on P/B-ROE is HK$29.0,implying0.5x FY25E P/EV(Fig). Maintain BUY. Key forecast change Valuation Disclosures& Disclaimers Analyst CertificationThe research analyst who is primary responsible for the content of this research report, in whole or inpart, certifies that with respect to the securities or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about the subject securities or issuer; and (2)no part of his or her compensation was, is, or w