[ET Net News Agency, 26 August 2020] UBS Global Research lowered its target price for
New China Life Insurance (NCI)(01336) to HK$34 from HK$34.5 and maintained its "neutral"
rating.
The research house said NCI reported a new business value (NBV) decline of 11%, even
after the company reduced the risk discount rate (RDR) assumption from 11.5% to 11%
(positive impact on NBV).
UBS believes the market has a much higher expectation for NBV growth, given the share
price rebound of 67% from the year-to-date trough, significantly outperforming the sector
at 37%. The NBV decline suggests a greater-than-expected deterioration in NBV margin post
the adoption of volume-driven sales strategy.
Given the strong equity market in 2H, UBS raised its 2020 earnings estimates by 21%, but
left its 2021-22 earnings forecasts largely unchanged. (KL)