3Q26 preview: NPAT to hit quarterly trough while OPAT remained robust

　　中国平安(601318)

　　Ping An is scheduled to report3Q26quarterly earnings on28Oct(Wed)post-market.We expect Group OPAT to grow8.1%YoY in9M26(1H26:+8.3%),implying broadlyintact3Q growth of7.6%YoY(vs1Q/2Q26:+7.6%/+9.0%)unaffected by the quarterlycapital market volatilities.Group NPAT could drop29%YoY in9M26per our estimate(vs.1H26:+36%),dragged by sharp A-share market corrections as CSI300/SHCOMPindex was down13%/6%in3Q26(vs.3Q25:+18%/+13%).NAV could rise3.0%fromyear-start,flat QoQ,as a combined result of1)higher fair value gains from OCI equitiesi.e.the CSI Dividend/CSI High Dividend Low Vol index rose9%/10%in3Q26and PingAn’s higher-than-most-peers OCI stock exposure(1H26:66%);2)China’s10yr govt.bond yield trending lower in3Q,which could boost OCI bonds’fair value,offset by the3)increase in liability reserve charge.NBV could see a double-digit decline,which weestimate to fall14%YoY in9M26.This was weighed by an industry-wide salesslowdown and a one-off negative impact on margin given the high comparative set priorto actuarial assumption changes by end-FY25.Despite an anticipated recovery in4Q,we revise down our full-year NBV growth forecast to bake in the3Q26lag.P&Ccombined ratio could be better than expected and we forecast to improve0.5pct YoYto96.5%in9M26.Maintain BUY with our H/A-share price target unchanged atHK$81/RMB73.

　　3Q NPAT to hit a quarterly trough within the year while OPAT stayed robust.We expect Group NPAT to decline29%YoY in9M26,mainly weighed by A-sharemarket headwinds in3Q26(CSI300/SHCOMP:-13%/-6%,vs.3Q25:+18%/+13%),offsetting1H investment gains.Despite this softness,Ping An couldoutperform peers in3Q IFRS net earnings given its greater exposure to OCI stocksthan peers(1H26:66%in stock mix/9.6%of insurance funds vs.peers’average of40%/4.7%).Group OPAT could grow8.1%YoY in9M26,translating into a7.6%YoY lift in3Q,of which we expect the L&H,PAB,and AM segments to remain soliddrivers.

　　NBV to fall on premium slowdown and a margin high-base.We forecast NBVto decline14%YoY in9M26(vs.1H26:+11%),dragged by an industry-wide salesslowdown against a strong comparative prior to the PIR cuts in Sep2025,the feed-through impact of tighter bancassurance regulation,and a one-off negative marginimpact given the base set before the actuarial assumption changes by end-2025.4Q NBV recovery could come along with the ramp-up of the2027jumpstart sales,yet the agency force would still need more time shifting towards life products withextended payment terms.We revise down our FY26E NBV growth forecast to4%.

　　P&C COR likely better than previous estimates.We estimate P&C combinedratio to improve0.5pct YoY to96.5%in9M26despite under the backdrop ofincreasing natural catastrophe(NAT CAT)claims in3Q.The COR improvementcould be a result of1)ongoing tightening of expense control,allowing the decreaseof expense ratio more than offset the increase in claims ratio(CMBI est);2)robustunderwriting prints in1H26left space for claims on major catastrophes in3Q26.On the premiums front,we maintain our forecast on low single-digit growth in9M.

　　TP unchanged; yield topped among peers. The stock is trading at 0.47x FY26EP/EV and 0.7x FY26E P/B with an avg. 3yr forward ROE >13% and a yield closeto 7% amid recent share price corrections, standing as the highest among peers.We expect a clearer guidance on 4Q-to-date life sales momentum and updates forthe 2027 jumpstart sales during the call. Maintain BUY, with our H/A-share TPunchanged at HK$81/RMB73 which implies 0.8x FY26E P/EV and 1.2x FY26E P/B

　　Key risks: 1) regulatory tightening on life insurance and financial conglomerates; 2)heightened equity market volatility; 3) a prolonged low-interest rate environment; 4)intensified pricing competition in P&C industry; 5) asset quality deterioration; and 6) asignificant decline in Group capital level weighing on DPS growth, etc.

　　Company description: Founded in 1988, Ping An is a leading financial conglomeratewith businesses spanning life and P&C insurance, pension, banking, brokerage, trust,and other financial services. The company pursues a technology-empowered growthstrategy across core financial businesses of insurance, banking, brokerage, and assetmanagement. As of FY25, Ping An ranked as the second-largest Life and P&C insurerin China by total written premiums. The banking business segment is operated by itssubsidiary Ping An Bank (000001 CH, 58% Group stake), which has a focus on retailand SME businesses. Ping An Healthcare and Technology (1833 HK, 53% Groupstake) was listed in May 2018 as China’s first listed internet-health company.