1Q26 preview: Expect resilient OPAT, NPAT to slide on equity swings; solid NBV uptrend

Ping An (2318 HK) 1Q26 preview:Expect resilientOPAT,NPATtoslideon equity swings; solid NBV uptrend Ping Anisscheduledtoreport 1Q26 earnings on Apr28 (Tue)post-market. We expectGroup OPAT to remain resilientatRMB39.2bn, up3.5% YoY(vs. 1Q25: +2.4% YoY)primarily driven byL&H andasset management (AM)segments.ForLife OPAT, weforecasta4.5% YoYincrease in 1Q26(1Q25: +5.0% YoY)supportedbysteadyinsurance AUMgrowthand a stable interest rate, whichshouldhelp narrow the declineinCSM release. We maintain ourviewthat L&H CSM balancewillreturn topositivegrowth in 2026E. Group NPAT couldfall10% YoY in 1Q26due toheightened equitymarketvolatility (CSI300/HSI:-3.9%/-3.3%in 1Q26,vs.-1.2%/+15.3%in 1Q25).Bycontrast, high-dividend yield assetsrebounded (CSIDividend Low VolatilityIndex/CSIDividendIndex:+2.1%/+4.1%in 1Q26,vs.-2.8%/-3.1%in 1Q25), whichwe estimatewill support a low-single digit uptick in Group net asset value.Looking ahead, weseeGroup OPAT acceleratingon a multi-prongedstrategy:1) L&H OPATgrowth fromnewbusinessand a scaled AUM; 2) PAB profit turnaround; and 3) easing AM dragalongside thedeepeningde-risking process.For1Q26, we forecast NBV toedgeup19.2% YoY,backed bysolid new business sales.Maintain BUY. We fine-tune our TPto HK$86 (previous: HK$90),implying0.83x FY26E P/EV and 1.2x FY26E P/B. Target PriceHK$86.00(Previous TPHK$90.00)Up/Downside39.8%Current PriceHK$61.50 China Insurance Nika MA(852) 3900 0805nikama@cmbi.com.hk Stock Data Shareholding Structure 1Q26 OPAT/NPATtodivergeamidheightened equitymarketswings.Weestimate Group OPAT to rise by 3.5% YoY to RMB39.2bn, underpinned by resilientL&HandAM segments,along withrecoveredPAB profitabilityfroma low base.For Life OPAT, weanticipatea steady 4.5% YoYincrease(1Q25: +5.0%), drivenby robust CSM balancesupported bynew businessgrowthand a relatively stableinterest rate. For P&C, OPAT is likely todeclineasimprovedunderwriting profit(CMBI est. 1Q26CORat96.1% vs. 1Q25: 96.6%)shouldbeoffset byweakenedinvestment income. For PAB, weexpect an earnings inflection on the back ofanarrowed NIMdeclineand better operating efficiency. In 1Q26,theAM segmentis likely tobenefit frombrokerageupside.Top-performerCITIC Securities (600030CH, NR/6030 HK, NR)posted a54.6%YoY surge in its 1Q26 preliminary net profit,providingapositivecross-read for Ping An’s AM performance. Group NPAT coulddecline10% YoY in 1Q26due toheightened equity swings, with theCSI300/HSIdown 3.9%/3.3%. Despitethisvolatility, webelievePing An’sbottom-linedeclinecouldbe middling among key peers,given its higher OCI stock allocation ininsurance funds at57%ofFY25, vs. 18%-42%for other A+H insurers NBV uptrend sustains amid strong savings demand.WeestimateNBV to rise19.4% YoY in 1Q26,drivenbyelevatednew business salesbutpartially offset bymodestmargin contraction. Weattributethe accelerating new business salesto1)continued strong deposit migrationin domestic market, and 2) bancassurance-ledgrowth outpacing agencyduring the 2026 jumpstart sales. NBV margin couldretreatmodestlydue to1) continued product mix shifttowardslower-marginpar/shorter-durationpolicies, and 2)rising new business contribution from channels ofbancassurance and community finance. Looking into 2026E, we expect L&H NBVto sustain a high-teensYoY increaseprimarilysupported by new sales growth. Auditor: Ernst & Young Related reports: 1.Group OPAT back to double-digit rise;expect CSM to return to positive growth in2026E, Mar30,20262.Banca fuelling NBV growth in jumpstartsales; 4Q earnings could ease on growthstock corrections, 23 Jan 20263.China Insurance-Easing solvency riskfactors to steer insurance funds into long-term stockholdings, 8 Dec 20254.3Q earnings beat; improving businessqualitywith catalysts across-the-boardworth to expect, 31 Oct, 20255.1H25 a mixed bag:NBV beat whileOPAT in line, Aug 28, 2025 Valuation:Thestock is trading at 0.6x FY26E P/EV and0.8xFY26E P/Bwith ayield of 5.4% andanavg.three-yearforward operating ROEabove13%. We fine-tune ourprice target to HK$86 (fromHK$90) based ontheSOTP,bakingin risingmarket headwinds,whilekeepingotherkey operating metrics largely unchanged.Our new TP implies 0.83x FY26E P/EV and 1.2x FY26E P/B. Maintain BUY. Keycatalysts include1) L&H CSM release and balancegrowth inflection in 2026E; 2)PAB profit turnaround;and 3) continued de-risking process toeasetheAM drag. Key risks:1) regulatory tightening on life insurance andfinancial conglomerates;2)significantlyheightened equity market volatilities; 3) prolonged low-interest rateenvironment; 4)intensepricing competition intheP&Csector;and5) asset qualitydeterioration, etc. 6.1Q25 NBV stayed robust lifting L&HOPAT back to positive growth, Apr 28,20257.Life OPAT awaits for longer time toturnaround, 24 Mar, 2025 Disclosures& Disclaimers Analyst CertificationThe research analyst who is primary responsible for the content of this research report, in whole or in part, certifiesthat with respect to the securities or issuer that the analyst covered