第三季度净利润在高位基础上翻了一番多

China Life (2628 HK) 3Q net earnings almost doubled on a high base China Lifereportedastrong set of3Q earnings, with 3Q25 net profit almost doubledon top of a high base in 3Q24 to RMB126.9bn, marking a rise of 92% YoY andlifting the 9M25result up by 61% YoY to RMB 167.8bn, close to the mid-point ofprofit alert. The surge outpaced listed peers and was propelled by bothinsuranceservice results (benefiting from a rising yield, i.e. CNGB10YR up 22.7bps in 3Q25)and investment results (thanks to thestrong rally inA/H shares, i.e.CSI300/HSI+18%/+16%). We mentioned in ourlast notethat the dip in 2Q caused by increasinglosses on onerous contracts which adversely impacted insurance service expense(ISE)islikely to be short-term, and in 3Q, as we see spot interest rate rebound, theinsurer’s ISElargely dropped by79% YoY to RMB7.5bn (vs.3Q24: RMB 36.2bn),acceleratingthe growth ofinsurance service resultsby 2.1x YoY to RMB 47bn,aquarterlyhigh.NBV jumped 41.8% like-for-like in 9M25, more than doubled from therise of20.3% in 1H25,andwe think 3Q NBV couldhavedoubled, driven by both53% increase of FYP and margin expansion. Lookingahead to4Q25E, we think alow base of insurance service result could benefit an earnings uptick. To reflect thestrong3Q earnings,we revise up our FY25-27E EPS estimates to RMB6.03/4.41/4.95.Maintain BUY, with TPraisedto HK$31, implying 0.5x FY25E P/EV. Target PriceHK$31.00(Previous TPHK$29.00)Up/Downside26.4%Current PriceHK$24.52 China Insurance Nika MA(852) 3900 0805nikama@cmbi.com.hk Stock Data Equity investment gains asthekey earnings driver.In9M25, total investmentincome grew 41% YoY to RMB 369bn, translating into 73% YoY increase in3Q25. Total investment yield reached 6.42%, up 1.04 pct YoY thanks to thestrong equity market performance.Mgmt.mentioned in call that they hadincreased the scale of open-market equityby >RMB 380bn from year-start,equivalent toRMB 230bn increment in 3Q25 (vs. 1H25: >RMB 150bn).Weestimatealarger proportion of this amount was assigned to TPL stocks ratherthan OCI to capture 3Q’s growth stock momentum. As of1H25, theinsurer’smixof TPL/OCI stockswas 77%vs.23%, with ahigher TPL share than most peers;and the share of OCI stocks/TPL stocks/funds accounted for 2.0%/6.7%/4.9% oftotal investment assets. Considering enhanced equity investment scale in 3Q, weexpect the mix of TPL/OCI stocks tomaintainorslightlyimproveto be morebalanced. Looking ahead, we expect thescaleof equity allocation to enjoy growthheadroom; anditsportfolio tiltingtoTPL stocks would enhance earnings flexibility.NBV likely morethandoubled in 3Q25.NBVwas up by 41.8% LFL in 9M25, doubled from 20.3% in 1H25. We estimate the 3Q NBV couldbemore-than-doubled on aLFLbasis, driven by a strong FYP increase of 53% YoY to RMB56.8bn in 3Q25 and margin expansion. The liability structure remained in balance,with FYP of life/annuity/health insurance at 32%/32%/31%. The proportion ofFYRPfrom floating-yield products increased over 45pct YoY,marking asignificantincreaseamid progressive transition to par products.The numberoflife agents increased 2.5% QoQ to 607k, broadly stable.For4Q25E, we think thePIRcut from Sep could further improve the NBV margin amid strongbancassuranceNBV.WeliftourFY25ENBV growth forecast to 38% YoY. Auditor: KPMG Related reports: 1.2Q earnings dip could be short-term;DPS uptrend a bright spot, Sep 3, 2025 2.Profit beat; net asset turned to positivegrowthforimprovedasset-liabilitymatching,May 2, 20253.4Q slowdown as expected;DPSexceeded >50%,Mar 28, 20254.4Q net profit could decline despitebetter capital market, Jan 27, 2025 (link)5.3Q NPAT boosted by net fair valuegains;expect resilient full-year NBVupswing, 5 Nov, 20246.Strong lift in banca NBV margin;investmentincome may continue torebound in 2H24M, Sep 2, 20247.Highest VNB growth in years; net profitdecline narrowed on track, May 2, 20248.4Q net loss markedly narrowed; VNBgrewin low-teens despite revised EVassumptions, Apr 8, 2024 Insuranceservice result hit a record high.Insurance service expensesdropped 20% YoY to RMB 95.7bnin 9M25, implying 79% reduction in 3Qdue tothe uptick in spot interest rate yield. In 3Q, China’s 10YR govt. bond yield rose22.7bps to 1.88% which likely reduced the liability costsof VFA contracts andboostedthe CSM balance,aidingthereversal of losses on onerous contracts. In1Q/2Q25, ISE was down 33%/up 42% YoY with spot interest rate up 14bps/down17bps respectively, which caused insurance service resultsup124%/down 175%YoY. Looking forward, as the proportion of par products expands, we thinktheinsurer’s earnings sensitivity to interest rate movement couldincrease.In4Q25E,a low base of insurance service result couldleadto an earnings uptickin ourview. Valuation.The stock is trading at 0.4x FY25E P/EV and 1.0x FY25E P/B. We liftour FY25-27E EPSestimatesto RMB 6.03/4.41/4.95 (previous: RMB 2.99/3.23/3.67) to reflectthestrong 3Q profitability and improved investment strategy. WeliftourTPto HK$31 (previous:HK$29) b