1H26 preview: 2Q OPAT strength persists while NBV takes a breather

PLEASE READ THE ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES ON LAST PAGE MORE REPORTS FROM BLOOMBERG: RESP CMBR <GO> OR http://www.cmbi.com.hk 1 MN 22 Jul 2026 CMB International Global Markets | Equity Research | Company Update Ping An (2318 HK/601318 CH) Ping An (2318 HK/601318 CH) - 1H26 preview: 2Q OPAT strength persists while NBV takes a breather 1H26 preview: 2Q OPAT strength persists while NBV takes a breather China Insurance 12-mth Price Performance Source: FactSet Related reports: 1. 1Q OPAT a slight beat; positive outlook for full-year NBV and life OPAT acceleration, Apr 29, 2026 2. 1Q26 preview: Expect resilient OPAT, NPAT to slide on equity swings; solid NBV uptrend, Apr 22, 2026 3. Group OPAT back to double-digit rise; expect CSM to return to positive growth in 2026E, Mar 30,2026 4. Banca fuelling NBV growth in jumpstart sales; 4Q earnings could ease on growth stock corrections, 23 Jan 2026 5. China Insurance - Easing solvency risk factors to steer insurance funds into long-term stockholdings, 8 Dec 2025 6. 3Q earnings beat; improving business quality with catalysts across-the-board worth to expect, 31 Oct, 2025 Ping An is set to release its 1H26 results on Aug 20 (Thu) post-market. We estimate Group OPAT at RMB83.3bn (+7.2% YoY), implying a robust 2Q26 increase of 6.8%, (vs. +7.6% in 1Q26). We expect Group NPAT to reach RMB83.8bn (+23% YoY), slightly above OPAT, reflecting positive short-term investment variances from the 2Q equity market rally (i.e. CSI300: +12% in 2Q26 vs. -4% in 1Q26/+1% in 2Q25) and revaluation gains on the conversion value of the outstanding convertible bonds. Key drivers for this solid 1H26 performance include 1) L&H OPAT expected to grow ~3% YoY (CMBI est) benefiting from a more stable interest rate environment in 2Q26 (i.e. 10YR government bond yield down 5.7bps, vs. -17bps in 2Q25), which should aid new business contractual service margin (NB CSM) growth. This is partially offset by a near-term deceleration in CSM release, as in-force book mix shifts toward savings products; 2) P&C underwriting to improve on disciplined expense controls, and we project 1H26 COR to edge down to 95.1% (vs. 95.2% in 1H25); 3) PAB to deliver quality growth in line with its year-start guidance; 4) Asset management profit momentum likely sustained thanks to improving sentiment and trading activities. We remain positive on the Group’s core earnings trajectory, and reiterate our view on L&H CSM growth inflection by FY26E. Maintain BUY, with TP at HK$86/RMB75 (unchanged) based on SOTP implying 0.83x FY26E P/EV. ◼ L&H core metrics back on track. We estimate 2Q26 Group OPAT at RMB42.5bn (+6.8% YoY) driven by cross-segment growth. L&H OPAT is likely to sustain its uptrend as CSM release gradually returns to a growth trajectory. We estimate the Group’s NB CSM to rise by mid-teens YoY in 1H26 against a more stabilized interest rate backdrop, though partially offset by a lower CSM release rate due to in-force pr