Among the popular Hong Kong stocks, China Life Insurance Co. (HK:2628) shares have gained Buy ratings from analysts, mainly driven by the company’s better-than-expected first-quarter results for 2024. Recently, analysts from DBS and CMB International reaffirmed their Buy ratings, anticipating a promising outlook ahead.
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In Q1, the company announced a remarkable 26.3% year-over-year growth in VNB (value of new business), marking its highest in recent years. Operating profits also saw a positive trend, increasing by 4.4% compared to Q1 2023. However, the company reported a 9% decline in Q1 profits due to reduced stock investments and bond yields.
China Life is a leading life insurance company in China with the largest market share.
Recent Analyst Ratings for China Life
Last week, Ken Shih from DBS reiterated a Buy rating on China Life stock at a price target of HK$16, implying an upside of 48%. Shih was impressed with the VNB growth, which was driven by better product pricing, cost management, margin growth through bancassurance, etc. Bancassurance refers to a collaboration between an insurance company and a bank, enabling the insurance company to market its products to the bank’s clientele.
As a result, DBS revised its VNB growth forecast upward to 12% and 8% year-over-year for FY24 and FY25, respectively. This was increased from the previous forecast of 4% for FY24 and 7% for FY25.
Before Shih, Nike MA from CMB International Securities reaffirmed a Buy rating on China Life stock, predicting an upside of 25%. He also highlighted the company’s strong VNB growth, which reflects a perfect balance of its various product forms, duration, and cost structure.
Moving ahead, supported by positive equity market sentiment and stable long-term interest rates, CMB anticipates stronger investment performance in Q2, potentially driving net profit growth.
What is the Price Forecast for China Life Shares?
Year-to-date, China Life stock has gained 12%. As per the consensus rating on TipRanks, 2628 stock has received a Moderate Buy rating, supported by two Buy recommendations. The China Life share price forecast stands at HK$13.68, signifying a potential upside of 25% from the current level.
