Damo: Raising the target price of Ping An of China (02318) to HK$89, reaffirming the “increase” rating

The Zhitong Finance App learned that Morgan Stanley released a research report saying that their views on Ping An China (02318) are becoming more optimistic, believing that it can seize the three core opportunities of wealth management, healthcare, and old-age services. The bank expects investors' concerns to gradually dissipate, paving the way for a revaluation. Therefore, the “Overweight” rating was reiterated, and the target price was raised by 27% from HK$70 to HK$89.

Although the core valuation method remains unchanged, Damo believes that China's profit after tax is more stable and predictable than net profit after tax, and that combined with dividend analysis can bring new insights. At the same time, asset-light income from the Group's medical and pension business is expected to further drive revenue and profit growth. Considering the Group's short-term to medium-term ROE of 14-15% and capital costs of less than 10%, the bank believes that the Group's price-earnings ratio valuation is expected to rise from about 7 times to double digits.

Looking ahead, Damo expects Ping An China's return on operating net assets to reach 14-15% in 2028, and the life contract service margin (CSM) balance will resume 1.9% growth in 2026; the new business value (VNB) compound annual growth rate will rise back to 21% in the next two years, and the compound annual growth rate of the Group's operating profit will also increase to 11% in the next two years.