Bottom line: We hosted Taiping mgmt team at our Asia Financials Corporate day. Investor questions focused on investment asset allocation and strategy, product and channel growth, tax treatment, and dividend and balance sheet. 1) After underperforming peers in 1H25, Taiping increased equity allocation, in line with regulatory direction. This was reflected in strong investment results in 3Q. 2) Jump-start sales in Jan was in line with company’s expectation, and Taiping sees better sales of annuity products compared to 2025. 3) On dividend, Taiping will focus on DPS growth, given the strong profit growth in 9M25. 4) Furthermore, Taiping sees potential positive benefit from the announced revision to tax calculation for insurers, given its effective tax ratio in 2024 and 9M25 was above peers.
We are Neutral rated on China Taiping. Our 12-month, SOTP-based target price is HK$15.0, implying 0.5X FY26E P/B.
Key takeaways:
After underperforming peers in 1H25, Taiping increased equity allocation, in line with regulatory direction to invest 30% of new premium in listed equity. As a result, equity asset allocation increased significantly in 3Q, evident in the strong investment results in 3Q25 results. Looking ahead, Taiping will focus more on high-dividend stock investments in the H-share market, and growth exposure in the A-share investment portfolio.
Taiping has relatively limited property exposure, less than 4% of the investment book, with less than 2% in investment properties, where company sees stable rental income despite some downward pressure on fair value. Non-standard assets account for less than 2% of the investment book, and company believes quality of its NSA investments remains stable. Regarding Vanke exposure, Taiping noted that company has minimal exposure and holds no public Vanke bonds.
Jump-start sales was in line with company’s expectation. Focus remains participating product sales, and Taiping sees higher mix of (par) annuity product sales vs. 2025. Incrementally, Taiping sees more value of traditional productsales, following a larger cut to pricing rate in 3Q25 (50bps vs. 25bps for par products). In addition to higher margin, Taiping also noted that liability duration has already been reduced through the sales of par products in recent year, giving room to sell more traditional products.
Taiping has established strong bancassurance partnerships with the top 4 banks, and will continue to enhance partnerships with the other leading banks, such as CMB and PSBC. Taiping believes access to quality senior care services and its strong branding are key to improve market share in the channel.
Given the strong profit growth YTD, Taiping recognized the need to share it with investors. For FY25, Taiping will focus on DPS growth. In the medium-term, Taiping sees potential benefit from the announced revision to tax calculation for insurers, given its effective tax ratio in 2024 and 9M25 was above peers. If visibility improves on tax calculation, and given its strong balance sheet, Taiping believes it could focus more on payout ratio, to improve shareholder return.
Price Target Risks and Methodology - China Taiping Insurance Holdings We are Neutral rated on China Taiping. Our 12-month, SOTP-based target price is HK$15.0, implying 0.5X FY26E P/B. We value 1) Taiping Life at 0.6X FY25E P/B, based on our ROA projection; and 2) Taiping P&C and Taiping Re at 0.4X/0.4X P/B, based on FY26E ROE of 6.8%/7.0%.
Upside risks: Further improvement in life core solvency capital position and increase in capital upstream to the group, which could allow for higher dividend payout; Reduced capital consumption in the HK life insurance operation; Improvements in operating results in non-insurance segments; Better-than-expected investment results and normalized tax expenses.
Downside risks: Weaker-than-expected investment results to drag profit growth; Inability to maintain new policy sales growth, leading to continued decline in CSM balance and lower-than-expected NBV; Lower dividend payout ratio, reflecting further solvency constraint and profit growth pressure from both life and non-life insurance segments.