[ET Net News Agency, 7 January 2020] Daiwa Research lifted its target price for PICC
Property and Casualty (02328) to HK$13.2 from HK$13 and maintained its "buy" rating.
The research house believes PICC P&C's underwriting profitability reached a turning
point in 1H 2019 and expects positive surprises in its operating trends starting from its
forthcoming 2H 2019 results and throughout 2020.
Its rising underlying ROE (return on equity) should lead to a structural rerating in
PBR, Daiwa added. In the three provinces that have fully liberalised auto insurance
pricing since late-2018, PICC P&C saw both CoR (combined ratio) improvement and a larger
market share in 2019. Daiwa believes PICC P&C's CoR turnaround, driven by auto insurance,
will be sustainable and look for a further 1pp improvement to 97.6% for 2020 and 0.9pp
improvement to 96.7% for 2021. (KL)