CICC: Maintaining Sunshine Insurance (06963) outperforms the industry rating target price of HK$5.55

The Zhitong Finance App learned that CICC released a research report saying that Sunshine Insurance (06963) is currently trading at 0.3x/0.2x 2026e/2027e P/EV, keeping the company's profit forecast, outperforming the industry rating and target price of HK$5.55 unchanged, corresponding to 0.4x/0.3x 2026e/2027e P/EV, which has room for 60.9% increase from the current stock price.

CICC's main views are as follows:

1H26 results are basically in line with this forecast

Sunshine Insurance announced 1H26 results: net profit to mother +38.5% YoY to 4.69 billion yuan, and Life Insurance's New Business Value (NBV) +16.4% YoY to 4.66 billion yuan, all of which are basically in line with the Bank's expectations.

Life insurance dividend insurance transformation, NBV's sensitivity to interest rates improved

Sunshine Life 1H26 NBV was +16.4%/+14.7%/+19.2% year over year, and the new business value rate under the first-year premium caliber was -6.1ppt/-7.1pp/ -10.3ppt to 15.0%/11.9%/25.4% year over year. The bank believes or partly due to the transformation of dividend insurance and keeping the risk discount rate for floating income businesses consistent with traditional insurance, the share of dividend insurance in 1h26 total premiums was +25ppt to 37% year-on-year, driving NBV's sensitivity to a 50bp decline in return on investment improved by 9.2 ppt to 37% year over year. 19.9%

Financial insurance business improved steadily

Sunshine Financial Insurance 1H26's original premium income was +5.3% year over year, with car insurance/non-car insurance (excluding guarantee insurance) -1.5%/+13.4% year over year; overall, car insurance/non-car insurance comprehensive cost rates were -0.1pp/ -0.6pp/ +0.4ppt to 98.7%/97.5%/100.0% year over year, respectively, with an overall steady improvement.

Investment-side equity ratio declined slightly, and long-term debt allocations increased

The company's 1h26 net/total/comprehensive return on investment was -0.7ppt/-0.4ppt/-2.8ppt to 3.1%/3.6%/2.3%; among investment assets, stocks+equity funds accounted for -1.8ppt to 13.1% at the beginning of the year; the company increased its long-term debt allocation, and bond investment accounted for +1.6ppt to 53.8% of investment assets at the beginning of the year, with government bonds accounting for +1.1 ppt to 70.4% at the end of the previous year.

Net assets have declined slightly and may be expected to grow steadily throughout the year

The company's intrinsic value was +7.2% from the beginning of the year to 129.43 billion yuan, and 1H26's net assets were -4.9% to $55.33 billion at the beginning of the year, mainly dragged down by the fair value of FVOCI equity instruments falling by 5.97 billion yuan. Considering the value restoration and long-term trends of dividend assets since July, the bank expects the company's intrinsic value and net assets to grow steadily throughout the year.

Risk warning: New premium growth falls short of expectations; large fluctuations in long-term interest rates and capital markets; natural disasters; policy uncertainty.