PICC P&C Earnings: Valuation Raised on Higher Margins and Potential Regulatory Tailwind

We increase our fair value estimate for PICC P&C to HKD 15 per share from HKD 12 after a brighter margin outlook following management’s guidance and potential regulatory tailwinds in 2025. The valuation change factors in 50-80 basis points decline to combined ratio assumptions during our forecast period. The stock is fairly valued at 1.1 times the 2025 price/book ratio versus 0.6 to 0.8 price/book ratios for peers. The shares have outperformed year-to-date in 2025 thanks to its high earnings visibility and effective management execution. Trading at an above-peer valuation level, we believe PICC will need to deliver future nonauto CR below 100% to justify further upside.