Ping An Securities: High-quality development leads to value revaluation. Leading non-bank financial companies are more resilient.
Ping An Securities recommends focusing on top brokerage firms that have a balanced business structure, a more resilient fundamentals, and are more beneficially guided by policies promoting high-quality development of the capital market.
Ping An Securities released a research report stating that the insurance sector should be given priority, focusing on the stable fundamentals and Beta elasticity. 1) Insurance: Resident savings demand remains strong, and the optimization of business structure will help maintain stable performance on the liability side by 2025. There is still some uncertainty in the investment performance of insurance companies in 2025, but insurance stocks have significant Beta attributes, stable dividend levels, low sector valuations, and are suitable for long-term investment. If the equity market continues to be volatile, it is recommended to focus on China Pacific Insurance; if the equity market continues to improve, it is recommended to focus on New China Life Insurance and China Life Insurance. 2) Securities: Capital market reforms are deepening, and the securities industry is still in a reform cycle. It is recommended to focus on top securities firms with balanced business structures, more resilient fundamentals, and greater benefits from the high-quality development policy orientation of the capital market.
The main points of Ping An Securities are as follows:
Insurance: The liability side is stable, and the asset side is promising
1) Sector overview: Market fluctuations and fund underweight are significant. Since 2025, the performance of the insurance sector has been volatile, with Xinhua leading the sector overall; active equity funds have continued to underweight the insurance sector and individual stocks in Q1 of 2025. 2) Operating performance: The net profit attributable to shareholders of listed insurance companies in Q1 of 2025 has significantly slowed down year-on-year, and the growth rate of net assets attributable to shareholders has shown differentiation from the end of the previous year, but the dividend level remains stable. 3) Liability side: Uphold high-quality development. Property insurance premiums in Q1 of 2025 continued to grow steadily, COR optimized, individual life insurance new business differentiated, bancassurance contributions increased, and individual life insurance NBV generally grew rapidly. It is expected that the demand for guaranteed savings by residents will remain strong by 2025, and the cost of life insurance liabilities is expected to decrease. 4) Asset side: High dividend strategy may still be preferred. In recent years, the return on net assets has declined, and the total investment return has fluctuated greatly; in a low-interest rate environment, listed insurance companies may further increase their allocation of high-dividend stocks in the FVOCI category.
Securities: Deepening capital market reforms, top companies are more resilient
1) Policy perspective: Both investment and financing are working together, and capital market reforms are deepening. As important intermediaries in the capital market, securities firms are a key force in promoting the solid and deepening of capital market reforms and optimizing the allocation of capital market resources. 2) Market performance: Institutions are currently underweight in the securities industry. Active equity funds are underweight in the securities industry compared to the Shanghai and Shenzhen 300 by 6.29%, and the securities industry index is underperforming the broader market. 3) Fundamentals: Top companies are leading the industry in performance. In the first quarter of 2025, the net profit attributable to shareholders of listed securities firms increased by 78%, with the CR10 growing by 84%. The trend of expanding balance sheets continues, with investment income significantly increasing, and the investment business is expected to be the determining factor in performance for the year.
Risk warning: 1) Significant volatility in the equity market; 2) New individual life insurance policies and NBV below expectations; 3) Regulatory policies becoming stricter; 4) Property insurance claims exceeding expectations; 5) Exceeding expected decline in long-term interest rates; 6) Exceeding expected downturn in the macro economy; 7) Capital market reform policies progress below expectations; 8) Uncertainty over whether asset restructuring plans within certain industries can be implemented.
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