Open Source Securities: Upgrades China Life to a Buy rating

Open Source Securities Co., Ltd. Gao Chao and Zhang Enqi recently conducted research on China Life and published a research report titled “China Life 2025 Annual Report Review: Product Diversification Transformation Shows Outstanding Results, Dividends Achieve High Growth for Two Consecutive Years,” giving China Life a “Buy” rating.

China Life (601628)

Outstanding results from product diversification transformation, dividends achieve high growth for two consecutive years

By 2025, the company’s net profit attributable to shareholders is expected to reach 154.1 billion yuan, a year-on-year increase of 44%. In the fourth quarter, net profit attributable to shareholders was -13.73 billion yuan, turning to a loss quarter-on-quarter. Looking at the sources of profit:

(1) Insurance service performance: full-year revenue of 64.9 billion yuan, up 132% year-on-year, benefiting from rising interest rates which reduced insurance service fees under VFA policies. In Q4, a single-quarter loss of 2.7 billion yuan, likely affected by interest rate fluctuations.

(2) Investment service performance: full-year revenue of 131.8 billion yuan, up 32% year-on-year, benefiting from stock market gains. In Q4, a single-quarter loss of 15.5 billion yuan, mainly due to fair value changes, turning from profit to loss of 73.1 billion yuan quarter-on-quarter, with pressure from stock and bond market adjustments. The end-of-period EV is 1.47 trillion yuan, up 4.8% from the beginning of the year, with a lower growth rate due to market value and other adjustments of -962 billion yuan, and long-term interest rate increases causing bond revaluation declines on the asset side. After adding dividends, the company’s net assets attributable to shareholders at year-end increased by 21% from the beginning of the year, but decreased by 3.7% quarter-on-quarter from Q3. We forecast NBV growth for 2026-2028 to be +19.0%, +14.0%, and +13.0%, respectively, with EV increasing by +11.4%, +11.9%, and +11.9% year-on-year. Considering the impact of the transformation of guaranteed dividend insurance and capital market volatility, we have raised the 2026 and 2027 net profit attributable to shareholders forecasts to 168 billion and 177.6 billion yuan (previously 151.6 billion and 157.5 billion yuan), and added a 2028 forecast of 187 billion yuan, representing year-on-year growth of +9.0%, +5.8%, and +5.3%. Corresponding PEV ratios are 0.7x, 0.6x, and 0.5x. The annual report announced a full-year dividend of 0.856 yuan per share, up 32% year-on-year. The current stock price corresponds to a static dividend yield of 2.2%. We are optimistic about the company’s equity flexibility on the investment side, and the long-term liabilities are expected to maintain healthy growth. Maintain a “Buy” rating.

Full-year new business driven by bancassurance channels, product diversification shows results

(1) In 2025, total premiums reached 729.9 billion yuan, up 8.7% year-on-year, with new business premiums of 234.1 billion yuan, up 9.3%, mainly driven by high growth in bancassurance new business. Full-year NBV reached 45.8 billion yuan, up 36%, with significant improvement in value rate, benefiting from lower guaranteed interest rates and product structure optimization. The NBV growth rate was slightly lower than the first three quarters, likely due to increased proportion of dividend insurance and slowing marginal growth of new business.

(2) Individual insurance channel: total premiums of 551.8 billion yuan, up 4.3% year-on-year, with new business premiums of 109.5 billion yuan, down 8.1%. NBV reached 39.3 billion yuan, up 25.5%. In 2025, dividend insurance business in the individual channel grew rapidly, with the proportion of first-year premium increasing to nearly 60%, becoming an important support for new business. The end-of-period individual insurance sales force was 587,000, down 4.6% year-on-year, but the quality of the team continued to improve, with a 40% year-on-year increase in high-quality personnel and a growing new force.

(3) Bancassurance channel: total premiums of 110.9 billion yuan, surpassing 100 billion yuan, up 45.5% year-on-year; new business premiums of 58.51 billion yuan, up 95.7%, with the proportion of dividend insurance new business premiums increasing by about 15 percentage points; first-year premium of 26.48 billion yuan, up 41.0%. The number of partner banks exceeds 100, with 77,000 new outlets, up 25.9% year-on-year.

Significant increase in equity allocation drives total investment income, net investment income remains under pressure

In 2025, the company’s investment assets reached 74.2 trillion yuan, up 12% year-on-year. The proportion of fixed income assets decreased by 3.8 percentage points, while stock and fund allocations reached 16.9%, an increase of 3.3 percentage points from the end of June and significantly higher than 12.22% at the beginning of the year. The full-year net investment income was 193.8 billion yuan, down 1% year-on-year. Total investment income was 387.7 billion yuan, with an investment yield of 6.09%, up 0.59 percentage points, with increased allocation to equities contributing to the improvement in investment returns.

Risk warning: Fluctuations in capital markets may impact investment returns; insurance liabilities may underperform expectations.

Latest profit forecast details:

In the past 90 days, 7 institutions have issued ratings for this stock, with 6 giving a “Buy” and 1 an “Accumulate” rating; the average target price among these institutions is 55.47 yuan.

The above content is compiled from public information by Securities Star, generated by AI algorithms (Wangxin Calculation Backup No. 310104345710301240019), and does not constitute investment advice.