Lyon: China Life's per-share dividend last year increased by 32%, surpassing the original guidance; rated "Outperform the Market"

Lyon published a research report stating that, considering the recent correction in the A-share market, it has revised the profit and book value forecasts for China Life (02628), but maintains the H-share target price at HKD 33 and the A-share target price at RMB 45. The H-share rating is “Outperform,” and the A-share rating is “Hold.”

China Life’s net profit for 2025 meets expectations, with a final dividend of RMB 0.618 per share (same below), and the full-year dividend per share reaching RMB 0.856, up 32% year-on-year, exceeding previous guidance. Although solvency has declined, management expects it to rebound to 161% by the end of the first quarter this year. Full-year net profit increased 44% year-on-year to RMB 154.078 billion, implying a net loss of RMB 13 billion in the fourth quarter, which the bank considers within expectations, mainly due to high base effects and market adjustments in the fourth quarter. Net assets decreased by RMB 31 billion quarter-on-quarter in the fourth quarter, possibly reflecting some investment losses measured at market value.

The bank pointed out that stock investments accounted for a 3.67 percentage point increase in the total investment portfolio year-on-year, representing the most significant shift in asset allocation, mainly due to a 1.68 percentage point decrease in bond investments and a 1.33 percentage point decrease in non-standard equity investments. New business value grew 36% year-on-year, mainly driven by banking, insurance, and other channels, with new business value in these channels increasing by 169% year-on-year, and agent channel new business value rising 25% year-on-year. The bank believes China Life is a major beneficiary of the tightening of industry regulations on bank commission payments and the trend of shifting fixed deposits into insurance products.

(Edited by: Wang Zhiqiang HF013)

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