Damo: Opinions on Ping An of China (02318) are more positive and have significant growth potential, raising the target price to HK$89

The Zhitong Finance App learned that Morgan Stanley released a research report saying that its views on Ping An of China (02318,601318.SH) have changed to be more positive, believing that the Group can seize key opportunities in the fields of wealth management, health care and pension services, and sees that investors' concerns are fading, paving the way for a revaluation; reaffirming the “increase” ratings for H shares and A shares, and raised the target price of H shares by 27% to HK$89, and the target price of A shares was raised 21% to RMB 85.

Damo said that China's Ping An H share is still its first choice and has added Ping An to its China/Hong Kong focus list; it also predicts that the Group's return on operating shareholders' equity (ROE) is expected to reach 14% to 15% in 2028; the compound annual growth rate of core new business value (VNB CAGR) will rebound to 21% in the next two years; the margin of service (CSM) balance (CSM) balance (retained profit to be released in the future) will return to 1.9% growth in 2026; the Group's operating profit forecast will improve to the next two years. The transformation is taking place.

Considering that Ping An predicts a return on shareholders' equity of 14% to 15% and capital costs of less than 10% in the short to medium term, Damo believes that its price-earnings ratio valuation can recover from only about 7 times to double digits; it also believes that the Group can expand a wider market by strengthening comprehensive financial and value-added services.