GF Securities gives a "Buy" rating: China Taiping's net profit surged by 221%, dividends increased 3.5 times, is the valuation still undervalued?

China Taiping (00966) delivered a strong-than-expected annual report: in 2025, attributable net profit surged 220.9% year over year; the dividend per share rose from HK$0.35 to HK$1.23, an increase of more than 250%. In a research report, GF Securities said the company significantly increased its dividend level, far exceeding market expectations, demonstrating management’s strong confidence in future business growth and solvency. The company has been the first to roll out the dividend insurance transformation; the 26-year product structure adjustment pressure has essentially been digested. Using EV-based valuation at 0.45x PEV, the implied fair value is HK$29.34 per share, and the stock receives a “Buy” rating.

GF Securities believes there are two major drivers behind the earnings surge: first, profit from the investment business grew 150% year over year; the narrowing of underwriting and financing losses by 14% drove a notable improvement in the investment side’s performance; second, tax treatment optimization—its tax rate fell from 42.2% to -9.5%—with a large amount of tax-exempt income released, resulting in a tax reversal.

The value side is also steady. New Business Value (NBV) grew 5.3% year over year, and the NBV margin rose to 21.3%. Embedded Value (EV) grew 19.8% year over year, with growth outpacing peers; the positive contribution of investment variance to EV increased sharply from 1.1% to 8.6%. The company’s net assets grew 33.9% year over year, and the balance sheet has continued to improve.

(Editor: Wang Zhiqiang HF013)

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